One of my favorite 21st century business models as a mergers & acquisitions intermediary with an over thirty year focus on facilitating transactions in the manufacturing sector is manufacturing with a direct to consumer sales channel. I have seen this business model employed very effectively at companies that I have sold like Tom Bihn (https://www.tombihn.com/) which manufacturers premium products in the Pacific Northwest and sells them directly to a loyal customer base in a business model that delivers superior customer service, quality products, creates good Seattle employment opportunities, and generates an attractive return on investment for ownership.
Entrepreneurs are some of the smartest, out of the box thinkers in society. They consistently assess the business landscape in terms of consumer demand, product & service provision, and envision & create companies that can profitably address opportunities and fulfill needs in the marketplace. The largest marketplace for products & services in the world is the United States (https://www.investopedia.com/insights/worlds-top-economies/) by a significant margin. Family businesses to public traded international companies all seek to complete transactions and satisfy demand for products and services in this marketplace. Companies like Chinese fast fashion industry leaders Shein (https://youtu.be/gWotBPtsulo?si=wMvlNuplDF2qh6q5) and Temu (https://www.temu.com/) created opportunistic direct to consumer manufacturing and sales operations in the last decade. These companies taking advantage of the de minimis exception to the United States Tarriff Act of 1930 (https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act), which allows for products to be shipped into the United States with values of under $800 in total value tariff and state tax free based on an Obama Administration increase of the basis for tariff free imports from $200 to $800 in 2016 (as comparison the European Union has a tariff free threshold of $150 euros), employing present day shipping & logistics infrastructure manufacture products in Asia and ship them directly to consumers in the United States without paying any import duties or having the requirement to collect sales tax on the products combining that discount with the low labor rates paid in their countries to sell products to consumers in the United States at discounted rates for competitive advantage over what can be manufactured and sold by American manufacturers who pay higher wages, are required to collect sales tax, where appropriate, on transactions, and internationally based manufacturers that ship in larger value shipping sizes.
This competitive advantage has resulted in a significant increase in the number of shipments arriving into the United States from overseas for retail delivery to consumers. In 2014, approximately 140 million de minimis shipments came into the United States, by 2023 that figure had increased to an estimated one billion deliveries. These product shipments account for most of the international cargo entering the United States according to U.S. Customs and Border Protection, who predicts approximately 4 million deliveries a day in 2025 originating from outside of the country.
This tariff and state tax loophole advantage for international direct to consumer manufacturers taking advantage of a global air shipping network that can have a product delivered from a manufacturing plant in Asia to a home in less than a week is having a detrimental impact on companies from Amazon & Walmart to the neighborhood retail stores in local communities across the United States forcing business closures, the loss of jobs, and diminishing tax collection in local jurisdictions that fund school, roads, emergency services, and other social safety net programs.
An effective federal government recognizes when their domestic manufacturers, wholesalers, and retailers are being placed in a competitive disadvantage. President Trump and his economic advisory team has identified this important issue and is attempting to put regulations and policies in place that will level the playing field for domestic and larger scale manufacturers operating with more traditional retail manufacturing and sales strategies. I share this situation because the United States economy; the health of its publicly traded companies, privately held companies, and family businesses; and having abundant opportunities for entrepreneurship domestically and jobs that pay living wages is an area of advocacy for me. A robust discussion is starting in the public domain related to the effectiveness and impact of international tariffs as economic stimulation, tax collection, and international policy negotiating tools for the United States. Only time will tell, if the strategies employed were prudent or ill advised. However, I believe it is abundantly clear that the de minimis loophole needs to be closed, so these international origin transactions result in state sales taxes being collected and domestic United States manufacturers, wholesalers, and retailers are not losing revenues to businesses employing slave or workers being paid wages not on par with those paid to American workers producing similar products.
The concept of creating a cultural, economic environment where domestically produced products are given a “home field” advantage in their home nation is not a new one. It was effectively employed by Gandhi in India’s fight for independence from the British Empire when he started a movement encouraging people to produce their own clothing and buy domestically produced textiles rather than ones fabricated in England (https://blogs.bl.uk/sound-and-vision/2022/12/recording-of-the-week-acts-of-protest-women-and-the-indian-independence-movement.html). A robust domestic manufacturing sector is an important component for national independence, security, economic health, and individual prosperity. It should be noted that President Trump and his economic team are encouraging foreign based manufacturers to build plants in the United States, so products targeted for United States consumers are not subject to tariffs, but combine the opportunity to sell into America’s robust marketplace with enhancing jobs domestically and strengthening our economy and manufacturing base. There is also no reason that products like Apple iPhones and Nike shoes & apparel are not exclusively manufactured in the United States.
One certainty in business is that those that fail to adapt are destined to fail. The public needs to be aware of the negative impact of the de mininus exception and encourage our government to address the current shortfall in United States policy. The following articles provide supplemental information on the issue outlined in this article: https://www.forbes.com/sites/saradorn/2025/02/07/trump-reinstates-de-minimis-tariff-exemption-for-shipments-under-800-boosting-shein-and-temu/; https://www.npr.org/2025/02/05/g-s1-46670/de-minimis-trade-china-temu-shein-trump; and https://www.cnbc.com/2025/02/07/trump-delays-ending-of-de-minimis-trade-exemption-targeting-china.html.
IBA as a M&A firm specializing in the facilitation of manufacturing sector transactions is regularly tracking trends, government policies, and innovations in the industry. We are all in supporting manufacturers who find ways to produce higher quality products more efficiently profitably. We do not support manufacturers who damage the environment, put consumers at risk, treat employees poorly, or don’t compete in the marketplace on the platforms of quality, superior customer service, and integrity. We welcome the opportunity to be a resource to entrepreneurs in this space who are strategically planning for a future sale of their businesses. All conversations with IBA are held in strict confidence. IBA only seeks payment from clients upon successful completion of projects. Please reach out to us if you are thinking of selling a manufacturing company in Washington or Oregon.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.