Stop blaming the tariffs

From Case Labs’ website:

Text for those with accessibility technologies:

We are very sad to announce that CaseLabs and its parent company will be closing permanently. We have been forced into bankruptcy and liquidation. The tariffs have played a major role raising prices by almost 80% (partly due to associated shortages), which cut deeply into our margins. The default of a large account added greatly to the problem. It hit us at the worst possible time. We reached out for a possible deal that would allow us to continue on and persevere through these difficult times, but in the end, it didn’t happen.

We are doing our best to ship as many orders as we can, but we won’t be able to ship them all. Parts orders should all ship, but we won’t be able to fulfill the full backlog of case orders. We are so incredibly sorry this is happening. Our user community has been very devoted to us and it’s awful to think that we have let any of you down. There are over 20,000 of you out there and we are very grateful for all the support we have received over the years. It was a great journey that we took together and we’re thankful that we got that chance.

We understand that there will likely be a great deal of understandable anger over this and we sincerely apologize. We looked at every option we had. This is certainly not what we envisioned. Some things were just out of our control. We thought we had a way to move forward, but it failed and we disabled the website from taking any more orders.

It was a privilege to serve you and we are so very sorry things turned out this way.

This has been picked up by the mainstream media for obvious reasons: they are blaming the Trump tariffs for their closure.

The only tariff that really significantly affected CaseLabs is that on aluminum. Which only went in place in March 2018. While tariffs certainly are NOT a good thing for the economy, it’s a stretch to blame them for bringing down CaseLabs.

The “default of a large account” is the part few pay attention to. And for CaseLabs to blame the tariffs for their woes is beyond the pale, since they’re looking to shift the blame for their closure to the White House and away from their business practices. And many have taken the bait.

They were already insolvent. The tariffs only sealed their fate.

For the tariffs to cause their closure in the equivalent of one fiscal quarter means they were already in the red. Deep in the red. The large account going into default robbed them of the revenue they needed to keep going. To be “forced” into liquidation – Chapter 7 bankruptcy – means they and their creditors do not foresee CaseLabs (and their parent company) ever having the revenue to recover their losses and pay on their liabilities. Which were already mounting and already getting them in trouble with their creditors (likely long) before the tariffs were enacted.

Even without the tariffs, that large account going into default likely would’ve taken them under anyway, especially if it was a customer who went into bankruptcy. Probably not in August 2018, but they likely would not have survived the year – or barely made it into 2019 – without additional revenue or funding to make up the shortfall.

CaseLabs made great computer chassis, with a massive amount of customization options. But it is not proper to lay even the majority of blame on the tariffs. They were already in trouble before the tariffs were enacted. Being forced into Chapter 7 liquidation, bypassing Chapter 11 reorganization, shows this. That they weren’t able to work out a deal with their creditors also shows this.

But everyone wants to blame the tariffs because that’s convenient and… Trump enacted them.