Cutting Through the Costs: How Tariffs Are Reshaping the Global Knife Industry.

Tariffs. The simple mention of the word makes some folks tear their hair out. That’s not a problem for me because the word doesn’t upset me that much. Besides, most of my hair has already fallen out anyway.

As you know, a significant portion of American knife companies depend on China to manufacture some, most or all of their knives. As you also no doubt know, President Trump is addressing America’s tariff imbalance with other countries—including China—in no small part to help erase some of America’s $36 trillion debt. And, at press time, he was threatening to impose higher tariffs on China than any other country.

How will the President’s tariffs affect the knife industry? I asked one industry insider and he told me of a recent trip he made to China to talk business with those who make many of the knives for the company he represents.

He said the last time he went there was 2018 and he was amazed at all the changes in the interim. There wasn’t a bridge from Hong Kong to China seven years ago. Now there is one and they drove on it to the Chinese mainland. There are new superhighways all over with no cars on them.

“It’s crazy the money they’re spending on infrastructure,” he wrote. When he went to one city in 2018 there wasn’t a traffic light in sight. Now it’s a city of 2.6 million people with high rises everywhere.

“Maybe it was my imagination but the vibe wasn’t great,” he observed of the reception he received earlier this year. “A couple of factories seemed to blow me off. I used to get the golden carpet treatment. One of our guys who speaks Chinese said he was having a hard time getting answers from some of them. I think the tariffs have them scared.”

I wondered out loud if the Chinese manufacturers thought they’d gotten most all they could out of the company my friend works for and are looking at other revenue avenues.

“I don’t think so,” he wrote. “The other markets are small in comparison to the USA. The Chinese knife factories are so specialized that making knives is really all they know.”

He added that the big Chinese manufacturers are building factories in Vietnam to avoid the tariffs, though he predicted the President would close the Vietnam loophole soon if he hadn’t already by the time this story hits print. I asked if that would make it more economically feasible for those American companies who have knives made in China to have them made domestically, and he hit me with the cold, hard facts.

“Rough numbers: cost to make a folder in the USA, $100; cost to make the comparable folder in China, $25. Double the cost with tariffs and Chinese-made knives are still half priced,” he emphasized. “Knives are such a niche market and relatively low volume that even with automation it would be tough to match the price of knives made in China. Marketing, design and innovation can overcome that cost gap. Look at Benchmade. They are killing it.”

Concerning my earlier question of whether the Chinese manufacturers might be looking at other sources of revenue, he returned with a qualifier.

“I did see two factories that are now making manicure stuff like nail clippers. Ten years ago you would not have seen that. A knife factory was a knife factory. One factory was making Nite Ize® products, so I guess they are diversifying,” he wrote.

“One more thing,” he added. “I went to a big-name [Chinese] factory and the owner did not appear to be worried about tariffs. He is focused on making the best knife he can, so I think you could say the higher-end manufacturers aren’t as worried about tariffs.”

My insider friend, however, disagrees with that rationale.

“I think when the market goes bad even the billionaires slow down on impulse buys,” he opined.

On the domestic side, at least one U.S. company official says costs are increasing for steel and other knife materials even though the steel and materials are U.S. made. Meanwhile, by the time you read this, here’s hoping the President has been able to work out, or is well on his way to working out, deals with most if not all of the countries on which he imposed tariffs. Either way, as my insider friend summarized,

“The tariffs are going to have a big impact on our little industry!”

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