On large batches like washers and screws, that’s correct. A good chunk of these contracts are smaller orders where the BOM accounts for the bulk of the machining process. Anecdotally, when prices went up during the pandemic due to supply chain, our manufacturing costs for most of our aluminum orders doubled. You want a dozen radio control knobs? Sorry, machining only takes an hour, but material just tripled in cost, and you have to buy 120’ minimum.

The main buyer for these are the US government. There is no passing off the cost, there’s just paying more for the same thing. The increase to material import costs is significant to the manufacturers of parts and assemblies.

I worked in aerospace manufacturing for about a decade. When aluminum prices went up during COVID due to supply chain issues, it in most cases, more than doubled the price of components we were making.

Often, a company will order say, 3 radio boxes. That could require 3 aluminum blanks to produce. Unfortunately, at small quantities, there’s no price break on materials, and often if you only need 3 blanks, you still have to purchase 10 blanks of material as a minimum lot charge. That cost does go to the buyer. If they order 10 radios, there would be no change price, because of the minimum lot. If the cost aluminum of blanks jumps from $200 to $300 each just because of tariffs, then the total cost on one that 3 radio order jumps $700 extra on extra material.

It’s a messy example, but when the prices change on the core items, everyone up the supply chain takes a chunk of that pie. If you’re shooting for 12% profit, that 12% on the new tariff price for material from distributors, manufacturers, and any number of assembly processes up the supply chain. It all cascades.

But the big thing is that these aren’t get sold to other countries en masse, so there is no passing it on