Some in the USA knife industry view tariffs on China-made products as an opportunity to reclaim the market for inexpensive knives. Are they correct?

Much has been written and reported on all fronts—pro and con—about the import tariffs instituted by the administration of President Donald Trump. At the recent BLADE Show West, Mike Vellekamp, head man of V Nives, predicted the tariffs are going to result in a “shift” in the factory knife market that will create a new “made-in-America force.”
Here’s how he sees it going down.

A “Made-in-America Force”

Manufacturers in Asia, especially China, have been able to make better inexpensive knives than U.S. manufacturers for years now due in no small part to low labor, advertising and other costs. Largely as a result, Chinese manufacturers have dominated the market for “price-point” or inexpensive knives in America. However, as a result of the tariffs, Mike opined, in order to maintain profits the Chinese will be forced to make more-labor-intensive knives and charge more for them in the USA. The Chinese could continue to make knives in the same way they have been for export to America, but if they do their profits will decrease due to the tariffs.

And the likelihood of the Chinese opting to make less money, the argument goes, is basically nil.

Consequently, in Mike’s scenario U.S. manufacturers will start making price-point knives to fill the niche the Chinese manufacturers will be forced to abandon.

According to Mike, U.S. knife companies will be more able to make price-point knives and/or have them made domestically because they will not have to pass along to consumers the added costs of shipping and importing and getting the knives through U.S. Customs, among other things, that they do now by having their knives made off shore.
Of course, several things must happen in the domestic knife industry for Mike’s scenario to occur, but he indicated he sees those things happening.

“If someone wants to make something in America and compete, they can do so as long as they automate and capitalize on some of our technological resources,” he said. “This will encourage the market for U.S. manufacturing and create a lot more jobs in the process.

“It’s going to make more sense to make knives in the U.S., especially as metal-injection-molding technology takes off better and with some of the 3D printing stuff we’re doing,” he noted. “We’ve got the technology, we’ve already got all the materials, we’ve just got to get the interest. We need to have the confidence of both the consumer and the manufacturer so they’re working together to create a made-in-America force. That’s what we need to be again. We’ve always had that, we’ve always been the pioneers of basically all industry, and we need to have that confidence again and quit being just ‘buy and sell.’ We need to start making stuff again.”

Doubts

Two high-ranking industry officials I spoke to whose companies import knives from Asia expressed doubt that Mike’s scenario will happen. They said they don’t see American knife manufacturing reaching the point Mike foresees any time soon—maybe never—plus the fact that Chinese manufacturers are simply too good at making price-point knives, and will find a way to continue to maintain their dominance in that segment of the U.S. market.

Still, Mike said the new realities that will occur due to the tariffs appear to be bringing some American manufacturers around to his way of thinking.

“I think U.S. knife manufacturers are going to do just what I’m talking about,” he said. “I’m not positive and I won’t name names, but the ones I’ve talked to kind of agree with me that the U.S.-made knife needs to be the price-point type.”

Will that need turn into a real shift in the factory knife market? Stay tuned for further developments.