Tariffs and The End Of Affordable Computing w/ Steve Burke

Summary

Better Offline Podcast Summary: "Tariffs and The End Of Affordable Computing" with Steve Burke
Released on May 7, 2025 | Host: Ed Zitron | Guest: Steve Burke (Gamers Nexus)

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1. Introduction

In this episode of Better Offline, host Ed Zitron welcomes Steve Burke, the host of Gamers Nexus, to discuss the intricate relationship between tariffs and the escalating costs of affordable computing. Steve recently released an extensive three-hour video titled "The Death of Affordable Computing," which Zitron highlights as the most comprehensive explanation of the current tariff situation in the tech industry.

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2. Understanding Tariffs: Definition and Mechanism

Ed Zitron begins by asking Steve to demystify tariffs for listeners unfamiliar with the term.

Ed Zitron [03:12]: "Is there any way you can break down in simple language how these tariffs actually work?"

Steve Burke [03:20]: "Effectively, tariffs are a tax paid on imports. Goods coming from other countries face this tax, which the importing company must pay. This cost is then often passed down to consumers through higher prices."

Zitron elaborates on the universal impact of tariffs, mentioning that they affect companies of all sizes, from large corporations to small businesses like Louis Rossman’s repair shop in Austin, Texas.

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3. Current Impact on the Computer Hardware Industry

Steve explains that the recent wave of tariffs has significantly impacted the computer hardware sector, leading to noticeable price increases across various products.

Steve Burke [06:33]: "Just days ago, Microsoft increased the pricing of its Xboxes, Logitech has raised the prices of keyboards and mice, and Corsair is set to increase the cost of computer cases we're reviewing."

These price hikes are not solely due to tariffs but are compounded by existing trends of "price creep" where prices rise incrementally over time independent of tariffs.

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4. Real-world Examples and Price Increases

Ed points out the tangible effects on consumers, particularly in the gaming and PC building communities.

Steve Burke [11:11]: "Cheap products are essentially gone. For instance, the Nvidia RTX 5090, initially priced around $2,000, is now hitting the $3,000 mark in some retail outlets. This isn’t just inflation; it's tariffs stacked on top of pre-existing price increases."

This surge makes high-end components increasingly inaccessible to average consumers, pushing the market towards more expensive, higher-tier products without corresponding performance gains.

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5. Supply Chain and Manufacturing Challenges

A significant portion of the discussion delves into the complexities of the global supply chain and why shifting manufacturing to the United States is not a straightforward solution.

Steve Burke [25:53]: "Why can’t companies just make in America? It’s not that simple. The cost of labor and the established supply chain infrastructure in countries like China make it economically unfeasible to replicate in the U.S. overnight."

Steve highlights that regions like Shenzhen offer unparalleled factory presence, tooling, and rapid prototyping capabilities that the U.S. lacks. Establishing similar infrastructure domestically would require immense time and financial investment, making it an impractical immediate solution.

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6. Future Implications and Corporate Strategies

The conversation shifts to how companies might adapt to these economic pressures. Zitron raises concerns about the potential shift towards subscription-based models as a response to increased hardware costs.

Steve Burke [18:49]: "Companies like Nvidia might push for an ownership-less model, offering game streaming services at a monthly fee instead of requiring expensive hardware purchases."

This strategy could further entrench consumers in a cycle of ongoing payments, diminishing the notion of ownership and potentially leading to reduced consumer autonomy.

Zitron also discusses Microsoft's recent move to increase the price of digital game downloads alongside hardware prices, suspecting it as a strategy to mask broader price increases.

Steve Burke [22:33]: "Microsoft is not just raising Xbox prices; they're also increasing digital game prices from $60 to $80. This bundling of price hikes can desensitize consumers, making them less likely to question the individual increases."

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7. Conclusion and Closing Thoughts

Ed and Steve conclude by reflecting on the broader implications of tariffs on the tech industry. While larger companies possess the leverage to absorb some costs or shift strategies, small and medium-sized enterprises face significant challenges that could threaten their sustainability.

Steve Burke [41:09]: "These forces are so much larger than individual companies that they can’t simply move operations or adjust without incurring substantial costs and delays."

Steve Burke [44:03]: "Our efforts to create the video cost over ten grand when you factor in travel and editing time, underscoring the resource-intensive nature of addressing these complex issues."

The episode underscores the fragile balance between maintaining affordable computing and navigating the intricate web of global trade policies, leaving listeners to ponder the future of tech affordability.

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Notable Quotes with Timestamps

• Steve Burke [03:20]: "Effectively, tariffs are a tax paid on imports...often passed down to consumers through higher prices."
• Steve Burke [06:33]: "Cheap products are essentially gone... the Nvidia RTX 5090... is now hitting the $3,000 mark."
• Steve Burke [11:11]: "The Nvidia RTX 5090... is now hitting the $3,000 mark in some retail outlets."
• Steve Burke [25:53]: "Why can’t companies just make in America? It’s not that simple."
• Steve Burke [18:49]: "Companies like Nvidia might push for an ownership-less model, offering game streaming services at a monthly fee."
• Steve Burke [22:33]: "Microsoft is not just raising Xbox prices; they're also increasing digital game prices from $60 to $80."
• Steve Burke [41:09]: "These forces are so much larger than individual companies that they can’t simply move operations or adjust without incurring substantial costs and delays."

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Final Thoughts

This episode of Better Offline offers a thorough examination of how tariffs are reshaping the landscape of affordable computing. Through the expert insights of Steve Burke, listeners gain a nuanced understanding of the economic pressures facing the tech industry and the potential long-term ramifications for both manufacturers and consumers.

For more in-depth analysis and discussions on the intersection of technology and society, subscribe to Better Offline on the iHeartRadio app, Apple Podcasts, or your preferred podcast platform.

Transcript

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[Ed Zitron]

Call Zone Media Coming up, will Steve Burke of Gamers Nexus be able to help Ed Zitron understand tariffs? Should we treat Sam Altman's new startup like a venereal disease? And who is the mysterious identical man living in Kevin Roos's mirror? All this and more on this week's Better Offline.

[Podcast Host]

Good grief. Better Offline. That's right. You're listening to Better Offline. I'm your host, Ed Zitron. As a reminder, you're now able to buy Better Offline merch. Check the episode notes for a link. Of course, more importantly, Today I'm joined by Steve Burke, the host of the Incredible Gamers Nexus. Someone I've wanted on the show since I started it, Steve recently put out a three hour long video called the Death of Affordable Computing. And it's the single best way I've seen anybody explain the current tariff situation. Steve, thank you for joining me.

[Ed Zitron]

Thanks for having me. Yeah, I'm excited to talk more about it.

[Podcast Host]

So is there any way you can break down in simple language how these tariffs actually work?

[Ed Zitron]

I mean, effectively the tariffs are, they're effectively a tax, right, that's paid on import. So the goods come in from any, any other country that's potentially tariffed and the company bringing those goods in has to pay some amount in order to complete bringing them in. And so that then gets passed on to somebody. Maybe they absorb some of the costs, maybe they increase the price of the product. But tariffs in general, of course, not a, not a new concept. And it's just this particular round of them has affected the computer hardware industry in a larger way.

[Podcast Host]

So they're paid by the people receiving the goods. So like height or cyberpower, whomever receiving a case, for example, would pay the tariff before they even shipped it to someone, correct?

[Ed Zitron]

Yeah, I mean it's the same all the way down to the smallest companies. We spoke to Louis Rossman as part of that piece. He's known best for probably right to repair and he's a good example where as a small repair shop in Austin, Texas, he's got maybe six or so employees. He personally doesn't, as he said in the video, bring in the goods, but he buys them from someone who does. So, you know, then that person would be the one importing them and paying the tariff.

[Podcast Host]

So what made you want to make this video? Because you've done a good amount of PC industry stuff. But tariffs feels like a jump from you. Not an illogical one though.

[Ed Zitron]

Yeah, tariffs was, it's a big topic and it was very challenging to try and approach because for us the number one reason to get into it was just we're starting to see the impact on computer hardware and a lot of companies had things to say about it. So that was the obvious reason to maybe look into it. The hesitations from us initially were this is a topic that it's very difficult to completely isolate from politics, which we try to stay away from, but it's also important and it does affect what we talk about every day, which is value and pricing. But the other challenge is that this is not something where I can claim to Be an expert. Like global trade, you might imagine, big. Yeah, it's a very large topic. But that made it interesting to us because it was one of those like, okay, so we're closer to where you might expect most viewers to be in terms of knowledge, where you're just getting the information daily. With the one exception that we might have better access to companies that do have a lot of experience with this stuff. And maybe no one person can break down global trade for us, and we've all seen economists on TV and whatever, but what we could get is people talking about just how does it affect them and their company and then hopefully with that, put together a fuller picture that's, you know, a little more maybe like a pragmatic approach to it. So that, that was. Yeah, that was the way to break it down for us.

[Podcast Host]

So for the listeners who haven't watched the video, and I say this is someone who can barely make it through a half an hour video. Watch the whole bloody thing. What is. How. What are the current effects? What are the things happening today to say PC manufacturers that people might not know about?

[Ed Zitron]

It's interesting, so might not know about. Makes that interesting. The ones that people do know about. I'll keep brief here, but just days ago, Microsoft moved to increase pricing of its Xboxes. Logitech has increased prices of its peripheral components, keyboards and mice, so forth. And this is something we're going to see at Corsair. I was just speaking to them. They're about to increase the price of some of their computer cases that we're in the process of reviewing. And that's kind of the obvious one. That's the one people expect. There's also. And having listened to some of your previous episodes, I think this might be a topic you'd want to get into. But there's also some room for greed, corporate greed, where this is a great cover story for them to change some prices. But then as far as answering the question, what effects might people not know about? I think there's some really interesting ones, sort of down chain in the supply chain, where things like logistics and freight and shipping companies are starting to have to deal with potentially reduced hours. And so you think about the supply chain to get a product from a country to another country just to make it in, say, China, a motherboard might require something like 100 factories if you tally all of them. Meaning including. Yeah, including the metals factories. And so you've got all those impacts and then you have the freight and the couriers, the port, the dock workers, the couriers on the other side, the warehouse workers. Right. It's just a huge chain and it's really, it can't be elastic. It's got to be pretty rigid. One of the interesting ones we're seeing though is some of the factories from some of the companies I was just speaking with are beginning to adjust their terms. So factories will allow terms of payment to be potentially partially upfront and partially on completion of order. Some of them are starting to adjust to front load. More of the upfront cost or all of it. And that's because they have kind of gotten scared of potential order abandonment. When companies can't afford the tariff, they abandon the container and stiff the factory. Yeah. And so that'll have this unseen impact later where it's going to affect the cost of money. Companies have to borrow money a lot of times to bring this stuff in. They have to pay more up front.

[Podcast Host]

Oh, so they'll be borrowing more money up front because otherwise. Because otherwise they won't be able to afford the orders that are now more expensive on the front end.

[Ed Zitron]

Yeah. And then they pay interest for a longer period of time that gets factored in. So it's just really like the more you talk to people, the more there's all these hidden consequences that pop up. And the one thing everyone kind of drove home was it's not to them the tariffs themselves that are necessarily the problem. It's sort of the, the way they were being rolled out where it was at least for a couple weeks. They're nearly daily changes and unpredictable.

[Podcast Host]

I did like during the video watching as you went from, from person to person saying, okay, right now this tariff is this, by the end of this conversation it may not be. Yeah, insane way to run global trade. You had a few examples as well where it kind of looked like certain things would just double in cost for the company, that they would just be paying effectively nearly double. Or like if it's 120 bucks to buy something, they're paying 100 bucks on top. How is any of this sustainable?

[Ed Zitron]

I think, I mean for the computer industry, I'm not sure that it is sustainable. There's already been price creep that is not anything to do with tariffs. Just over the last several years the companies, Yeah, I mean they have big markets to sell into and so if you're a small time consumer or gamer or you use Adobe Premiere with the Cuda gpu, you're just not at the top of the priorities. And the only way to get closer to the top is to pay a whole hell of A lot more for the components. So like there's already been price creep.

[Podcast Host]

When you say pay a lot more for the components, who is paying more there?

[Ed Zitron]

It's the consumer.

[Podcast Host]

I mean, yeah, so it's really the high end stuff is the best you have. Why do you have to buy the more expensive stuff? Is it just that it will be the cheap ones are having to use lower quality components or is it something else?

[Ed Zitron]

Well, it's interesting because it's almost like this question I think is the real answer is that cheap stuff doesn't exist anymore. The cheap products are gone. And this is pre tariffs. It's only getting worse. But you look at GPUs and Nvidia with its dominance has managed to slowly shift the low end into the mid range in terms of pricing and the mid range into the high end in terms of pricing, but not in terms of necessarily performance scaling. And so you're already paying disproportionately more for what you're getting versus several years ago. And this is beyond inflation. This is beyond tariffs. You stack something like massive tariffs on top of it and people who are already kind of struggling to justify a purchase of an expensive GPU. I was looking at RTX 5090s, which are supposed to be about a $2,000 video card about a week or two ago. I haven't checked today, but. And the cards were typically in the 2,900 to 300 $3,000 range.

[Podcast Host]

Jesus.

[Ed Zitron]

Yeah, that includes on shelves at micro centers. And some of that's going to be tariff impact and some of it is just kind of price creep.

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Buzz, we intercepted a Soviet radio transmission.

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[Podcast Host]

It does kind of feel like, well, to the title of the. To the title of the video. It's like that the end of affordable computing has already kind of happened because it doesn't seem for and for our less technical listeners when we say 50, 70, 50, 80, 50, 90, referring to Nvidia graphics cards on the consumer side. So the things you put in a computer so you can see what's on your monitor and also play games. Steve, I'm sure you love that technical explanation. Yeah, it's great, but it's. I nearly said 3DFX there for a second, aging myself. But it feels like those lower end ones aren't even anywhere near as good as you did a video on this as well, that the 50, 70, 50 80, the lower end or mid range ones just are nowhere near as good as mid range and lower end used to be.

[Ed Zitron]

Yeah, it's the, I think the most understandable version of this in terms of when we were trying to figure out how do we communicate what's happening to people, was we came to the word shrinkflation, which people are familiar with, except instead of a bag of chips, where you get.

[Podcast Host]

Well, maybe you should explain what it means. Sure, yeah.

[Ed Zitron]

Yeah. So the concept being that. And again, to preface this, we're experts on hardware, not economy, but this is stuff that it all kind of bleeds together in a way. We get familiar with it. But shrinkflation being the concept of you go to a store to buy your bag of chips or your bundle of toilet paper or whatever, and you get fewer items for minimally the same cost as it used to be. Right. So it sort of disguises the change in value, the cost per unit or whatever that you're getting. Then you apply this to electronics and the version of it is you buy the video card or the CPU and maybe you have lower performance, relatively speaking, than you would have had in previous generations, while still spending at least the same, but likely more. And one of the things that, you know, this kind of deviates from the tariffs discussion. But one of the things I'm concerned about is as cost for consumer electronics goes up, especially things like computers, and especially as caused by things like the current tariffs, there's an opening for companies like Nvidia to push for more of a lack of Ownership model. So like they have services where you can play games over the Internet, streaming.

[Podcast Host]

Kind of like Netflix, was it GeForce Now?

[Ed Zitron]

That's right, yeah. And this creates a great opening for these companies to step in and say, oh, we're so sorry you can't afford Our cheapest model $550 video card to play games or to render videos or do 3D modeling. But good news, we have something for you and it's $50 a month and you can use it for this many hours. And in between maybe we'll do ads or maybe we turn on and off the different services you have access to. And so that's one of my concerns is it's another step in furthering the you own nothingness of the current consumer economy.

[Podcast Host]

It kind of feels as one you hint. It hinted at it earlier as well where it's like these companies are. Microsoft's raising the price of the Xbox. I don't imagine that's coming down. I don't get, I don't get the sense that Microsoft is gonna say don't worry everyone, that everyone on Wall street, by the way they, the markets love it when we charge less. So we're gonna bring this down as an ethical company. It just feels like a, that there are the immediate near term effects where its prices are going to increase but just no one is going to like, no, no one's going to bring these prices back down at the end of the tariffs. No one really understands what's going on. So they, it almost feels like they'll be able to kind of push it under the rug and obfuscate what they've actually done as well.

[Ed Zitron]

Yeah, I think there's, there's a couple things going on where there's normally we as in gn, we're in a very cynical mindset for a lot of our coverage. And that's just the nature of it. It's not necessarily adversarial, but it's untrusting I would say, of what companies are saying. Part of that in this situation is okay, there are avenues here for companies to get the price increases they've wanted, but they've needed an opportunity to do it. But at the same time, unlike most the other stories we cover, this one is so wide reaching an industry impacting with the sort of sporadic nature of the tariffs application and also the high percentage of them that there are real consequences and it is hurting companies. So you've got this mix right where it's like we can't be too cynical this time because there are real world impacts, like with height, where they were just going to lose money for computer cases that they sell if they continued to sell them into the US market. So they've abandoned it. They decided we don't need to sell the U.S. we'll send them somewhere else.

[Podcast Host]

Which is crazy.

[Ed Zitron]

That's.

[Podcast Host]

That's a large part of their business.

[Ed Zitron]

Yeah, it was. I want to say the number the product director Rob Teller shared during the interview, I think he said 65% revenue is from the U.S. yeah, but at the same time. So that's where it's not helpful to be cynical because this is a real impact to this company. We've seen their numbers. But then on the flip side of that, back to the cynicism, you look at a company like Microsoft where they've increased not only the cost of their physical hardware, which is impacted by tariffs, cause a lot of it does come from China, but also they've increased the price of their digital downloads, like video games, where they're saying they're going to start moving towards an $80 per game model from typically 60. And digital video game downloads are not currently, as far as I understand it, are not tariffed.

[Podcast Host]

No. In fact, that's the whole point of digital downloads. Why are they $80? You're saving money selling this.

[Ed Zitron]

Right. And I think what's happening here is they have one real reason to increase the price, which is their cost has gone up on the hardware and that is giving them sort of COVID fire to also increase the price of things that haven't gone up. Maybe you could make an argument for inflation affecting development cost or something like this, but packaging it all together and doing it at the same time, I think it's also, it sort of exhausts the consumer's attention where it eases the acceptance of this higher price. Because at some point you get hit with this news so frequently you're like, I just, I don't care anymore. I get it. It's all expensive and you lose the capacity to be mad at a specific company.

[Podcast Host]

But it's just I truly am learning about this in real time. So Microsoft is raising the price of first party games to 79.99. That's completely insane. And I think that there is a delineation of cynicism here where you can be cynical about a company, but all of the companies you talked to in this video were very much. I mean, you had competitors hanging out with each other to tell you stuff. It feels like there is a marked difference between a company saying, yeah, we every Two minutes a wheel spins and we pay more on staff and having a real reason to do that. And a company just saying, yeah, games are 80 bucks now. I don't know what to tell you, mate.

[Ed Zitron]

Yeah, I think the companies we spoke to and they range like you said, from someone with six employees who's a sort of true small business owner. You think of an American small business owner and that's exactly the representation you think of all the way up to multi billion dollar publicly traded Corsair components, which makes memory, keyboards, computers, they even have some assembly in the US and all of them feel the impact in comparable ways. But where they differ is their ability to cope with it. And so I think it's these smaller companies that are going to get hit particularly hard. And this actually came up a couple of times in the interviews as well. One of them that we didn't include was a comment that someone from Corsair made. I think we weren't filming yet, but we were talking about gn and my goal with this wasn't to insert ourselves into this story. So we kind of kept anything about gamers, Nexus out of it, but the tariffs impact us too. And one of the comments he made, I asked him who do you think this affects the most? And he said, well, it's guys like you, right? Like it's small businesses and medium sized businesses because the big ones are large enough to have levers to pull.

[Podcast Host]

Right. And I guess I'm going to ask you one of the most annoying questions that I possibly could, which is, and you do cover this in the video, why can't they just make in America? And I know that the answer is it's going to be very obvious, but still people are going to want to hear.

[Ed Zitron]

Sure, yeah. It is actually a great question. It's obviously very common. It's complicated. So the easiest answer to that, I think if you try to boil it down into kind of like two components, there's cost, which everyone's familiar with and we can kind of get into that. So there's things like labor cost, real estate cost, all this, and, and there's maybe some greater social discussions to have there with regard to labor cost. But then there's also supply chain. And so if we ignore the cost component for a moment and just assume it costs exactly the same amount of money to make it in China or Vietnam or Thailand as it does in the U.S. which, which it doesn't. It's the global manufacturing average cost in terms of wage per hour is according to Corsair's CEO in our interview is 2 to $4 because it's obviously not even close. Yeah. And so if we just assume it's equal though, for sake of conversation, the new challenge is in China in particular, but just that part of Asia in general, there's already a huge factory presence. They have the tooling, they have the people, they have supply chain. And so what that really means is you can go to Huaqiangbei in Shenzhen right now and you can go talk to someone to get tell them you have this brilliant idea for a new electronic device. You can have someone design the pcb, you can have someone print the pcb. The printing can be delivered same day for a prototype. And you can also start sourcing factories for the capacitors, the inductors, the semiconductors, the MOSFETs, the shell or case if there's going to be one. All of that can happen in the same spot and it can all be sourced from sort of the same say 50 mile radius for the most part. And that doesn't exist in the U.S. and if you want to make a motherboard as an example that came up in the video in the US we didn't get too deep into it in the video, but there's probably 10 to 30 major component complete component suppliers for that board. So if you want to make that motherboard in the US which your CPU and your GPU go into, it's sort of the brainstem of the computer. You bring that over here and what you might have first is the assembly line. It's an automated line. It's primarily done by machine these days. So you bring over the SMT line, the surface mount technology line. That line has machines that first of all are made all over the world, right? Yeah. So that's already a different thing. And then those machines have reels of components like capacitors. The capacitors come from a factory in China. So you'd have to bring that factory over. That factory to make the capacitors has factories. So it uses factories for maybe ceramics or for aluminum or steel or copper, whatever they may use copper coil for inductors. You have someone doing the winding for the coil, for things like on power supplies. And all of that is down chain factories. So this one motherboard quote unquote factory, what they're doing is effectively equivalent to someone assembling a pre built computer in a pre built computer assembly plant in the U.S. like Lenovo, they're doing the same thing. They're putting all the parts together, but they're buying them from elsewhere. And that's fine. That's how it works. But to just bring that over, it's. It's not something you can flip a switch on.

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[Podcast Host]

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[Daniel]

Hi, I'm Daniel. I'm a particle physicist, and I think our universe is absolutely extraordinary.

[Kelly Wienersmith]

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[Podcast Host]

And it seems like a big part of it as well is that China already has this infrastructure to manufacture these things. To your point that they have someone who can do the prototype, that they have someone. I don't know, like, I assume there are like screw factories and things that don't exist in America, or if they do, they are geographically inefficient in comparison.

[Ed Zitron]

Yeah, I think that's a big part of it is there are factories in the US that can do various things. I mean, certainly you get down to physical hardware, like screws. I'm absolutely certain there's factories that make screws in the U.S. there's factories that make cardboard boxes in the U.S. but like you said, these things are not on the same block. And while that can be reconciled, making a company eat an extra cost is basically impossible. And so if the approach is to do some form of taxes, it would have to be so extreme that there really is no other choice but to start building factories in the U.S. but the problem then is that this takes years, so.

[Podcast Host]

And it doesn't. Hey, yeah, right.

[Ed Zitron]

Yeah, it would just. It just takes forever to start building. I mean, then if it's also just. It's an enormous amount of money, you can't just have it, you know, you need to plan for it. So. So that's a big challenge.

[Podcast Host]

It kind of feels like, on the cynical side, I mean, it kind of feels like it is the case where it's. So much of our economy is based on just cheap labor that we've outsourced our entire manufacturing to other countries. And it all relies upon a certain kind of discount labor that just doesn't exist and probably can't exist in America.

[Ed Zitron]

I think it not only can't exist in America, but the amount of available people is probably not high enough to create that many manufacturing jobs, especially instantaneously. One thing that's interesting, though, I don't think I've really spoken in anywhere about this side, but something that's interesting with contract manufacturing, especially in China, is at least for the factories we've toured and visited over the years, a lot of the contract factories, they shut down for Chinese New Year for a while. It's their biggest holiday. So similar to Christmas in the US you have several weeks off for a lot of people, and there it lasts pretty long. The one factory we work with and we've toured, they shut down for nearly a month for Chinese New Year. And when I once asked them when it was my first time over there, I asked the factory owner, it was basically, hey, no. Absolutely no disrespect, don't take this the wrong way. I'm just curious why such a long time, like, as an American, right, You come from a work culture in terms of just you're always at work for four weeks is a big stretch of time. Doesn't that affect your production? And he said something really interesting to me. Where that factory in particular, a lot of their laborers come from all over in China. China's very large, and they come from all these different provinces. And so they sort of migrate out to do the work locally at the factory, and then they might go back and maybe they're going back to work at home, or they just bring the money home and spend time with the family. And the interesting thing there is that kind of opened my eyes to how can a place like Shenzhen exist where almost everything you need to make a product is in, like, one city? That seems insane, right? Like, the amount of people you would need for that is crazy. And I guess that's part of it. And I don't, you know, obviously don't claim to be an expert in it, but just from personal experiences talking to people and visiting these places, these are kind of the pieces that have really clicked for me to help me better understand how manufacturing works.

[Podcast Host]

Yeah, it's just every time I think about what these tariffs are meant to do, I feel insane because it's like, okay, we're going to charge more for things to the people shipping them in, which will cause them to build things in America, which they can't do, but they should. Like that feels like most of the logic here, like that will just. Factories will sprout out of the ground like weeds. Like it's just bizarre.

[Ed Zitron]

Yeah. And even the companies that do make stuff here, this is what's interesting too is that. Yeah.

[Podcast Host]

Because you spoke to one, an actual manufacturing company in America.

[Ed Zitron]

That's right, yeah. So we spoke to three. Three companies that we spoke to have sort of different levels of manufacturing here. So there's one of them, the one you're probably referring to is called Protocase. And they stamp cases, so they assemble servers and network attached storage devices and then they can stamp their own cases for those. They take the metals, they put them in a big press with their own tooling and they press it and then they can kind of bend the metal into a server case. So they do some manufacturing here and they do a lot of it in Canada. The other two companies we spoke to are different type of manufacturing where it's assembly and actually Corsair to their credit has assembly as well. So I guess three and the assembly groups they. So Cyberpower PC makes pre built computers mostly for gaming. And they employ hundreds of people in the city of Industry, California area to assemble computers. And so those people take about eight to 10 components that Cyberpower does not make. They buy them from other companies and they assemble them right into a computer. And it's really that straightforward. But this is effectively a factory job, it's an assembly job. And the PC that's made ultimately it's branded a CyberPower PC. But just like any PC on the market, Dell, HP, Asus, it doesn't matter. They don't make the CPU, they don't make the GPU. That's probably Intel, Nvidia, AMD. They often don't make the cooler, the storage device, the memory. So all this stuff, yeah, it's got to come from other people. And for the most part the places it ends up coming from are going to be China, Vietnam, Thailand, Singapore, Malaysia, Taiwan, I don't think I named yet. And some stuff from Japan, but that's kind of the, that's where the stuff comes from. And then they assemble it in the U.S. but those companies that assemble the computers in the U.S. they still get hit by tariffs because they're bringing stuff in to complete the product. But what's interesting is it's almost like these components like CPUs and GPUs, you can think of them as raw materials where the product, the computer can't exist without those raw materials. But they're not blanket exempted as raw materials.

[Daniel]

Yeah.

[Podcast Host]

And it feels like you can't actually exempt any particular industry because of the manifold, different parts. I think Louis Russman made the point as well where it's customers are going to get pissed off about the price increases and it's kind of like, well, you're the one buying these things that are made with Chinese parts. It's not like you can avoid that.

[Ed Zitron]

Right. Yeah, no, I mean that was, that was an excellent point by him where he's, he's a repair shop and as he was saying, for the device to even get to him, someone else has to exist before him and that's going to be the customer buying from the original manufacturer. If the original manufacturer chooses to make their product, let's say entirely in Detroit and they use parts entirely from Detroit, then Lewis, the repair shop will probably buy replacement parts from Detroit.

[Podcast Host]

Right.

[Ed Zitron]

That's, that's where they come from. And so it's. Yeah, I think like him just as much as the assembly plants that put a product together the consumer's familiar with, they're affected by the same thing, which is there's forces so much larger than you. You can't, you don't have the option to move it because it's not yours. And so what do you do? Right.

[Podcast Host]

Yeah. One thing as we come to the end here, one thing that did strike me is how did you get all of these competing companies to actually hang out and talk to you quite candidly at the same time?

[Ed Zitron]

Yeah, it's, I've known a lot of the people in that video, I've known for pretty close to some of them like 12 to 14 years. Fortunately like we've run across each other at conventions a lot. And so for like the backstory, I guess Cyberpower and iBupower are two competing pre built companies and I pinned them both and I was like, hey, it would, it would be, it would really send a message if you guys agree with each other on this particular issue. I think it would help people understand that it is impacting both of you in similar ways because these are companies that they're fighting for the same market share for the same customers. And you know, if you can get them together in a room and they were even sharing numbers with each other, how many employees they have, how many units per year they make. Like this is crazy information to share. But I think it was sort of a solidarity moment where the read on the situation I had was the companies were all looking at this as this is our opportunity to try and explain why the prices are going to go up and whether or not it's for legitimate reasons or for the more cynical reasons we've discussed to them. It was an opportunity to talk about that. And I think our timing was a big part of that. Where we booked our tickets as soon as the pause went into effect on some of the international tariffs, or actually it was just before that, it was like a day before that. So we booked the tickets a day before the pause, right around when they went into effect, we landed. And then some of these changes like pauses and exemptions and non exemptions were happening already. But because of the chaos in that four day window, I think everyone was willing to talk to us on record because nobody knew what was going on.

[Podcast Host]

And just to close us off, you mentioned it's. It cost a ton of money and ton of time. How long and how much money Roughly, because this was. I do not watch videos at these length. Casey, Casey, friend of the show, Casey Kagawa knows this well. But I watched the whole thing like how much? Like roughly, because I want to make.

[Ed Zitron]

You work to make the video. So it was probably, if you count my time at zero dollars, then we should have been over ten grand in total cost. So that's travel plus editing time. There's a lot of editing time because we had over eight hours of footage. And the way it kind of came together, it was interesting where, you know, we got the news down the wire about the new. The word the government has officially named them is reciprocal tariffs. So when those came out, that was when we started booking the flights. And like I said, it was right before the pause on some of them. And so we booked the flights with no return flight. It was a 12 hour, 12 hours away till we got on that first plane. We had the first hotel booked. And then Vitaly, and I'm a camera operator, we flew out there and we played it day by day. And I used a hotel I knew. So I was basically like, hey, yep, we need to extend one more day, you know, and then we just kept booking them based on who I could get in touch with. I was just on the phone constantly calling every company I knew and they're kind of on the they're either in San Francisco or they're in LA for most of them.

[Podcast Host]

Stephen, it's been such a pleasure having you on the show. Where can people find you?

[Ed Zitron]

They can check out gamers nexus.net if they want the written adaptation of videos or the YouTube channel. Gamers Nexus is where everything goes and.

[Podcast Host]

You can find me on the Internet. You are listening to Better Offline. Of course, following this will be an extremely old liner that I swear I'll update one day. Thank you for listening. And Steven, thank you for joining us.

[Ed Zitron]

Thank you.

[Podcast Host]

Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Matt Osawski. You can check out more of his music and audio [e-mail] m a t t o s o w s k-I.com you can email me at easyteroffline.com or visit betteroffline.com to find more podcast links and of course, my newsletter. I also really recommend you go to chat where's your ed to visit the Discord and go to R betteroffline to check out our Reddit. Thank you so much for listening. Better Offline is a production of Cool Zone Media. For more from Cool Zone Media, Visit.

[Ed Zitron]

Our website coolzonemedia.com or check us out on the iHeartRadio app, Apple Podcasts, or.

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Hello, I'm John Lithgow.

[Ed Zitron]

We choose to go to the moon.

[John Lithgow]

I want to tell you about my new fiction podcast, One Small Step for Man, about Buzz Aldrin, one of the true pioneers of space.

[Podcast Host]

You're a great pilot, Buzz.

[John Lithgow]

That's the story you think you know. This is the story you don't. Buzz starring me, John Lithgow, on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Kelly Wienersmith]

We love learning about this extraordinary universe.

[Daniel]

And we love sharing what we've learned.

[Kelly Wienersmith]

And on our podcast, Daniel and Kelly's Extraordinary Universe, that's what we're going to do.

[Daniel]

I'm Daniel. I'm a particle physicist and I think our universe is absolutely extraordinary.

[Kelly Wienersmith]

I'm Kelly Wienersmith. I study parasites and there's just endless things about this universe that I find fascinating.

[Daniel]

Basically, we're both nerds.

[Kelly Wienersmith]

Each Tuesday and Thursday we take an hour long dive into some science topic.

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Learn all about our amazing and beautiful universe on Daniel and Kelly's Extraordinary Universe every Tuesday and Thursday on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.

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You're listening to an iHeart podcast.