The whole point of a distributor and their markup is to add value. If I have to deal with the manufacturer directly for defective items, why am I paying a markup to the distributor? What value are they adding to the product to justify their markup?

I would just quote them a really high price for a job so they’ll go elsewhere. That way you don’t have to refuse their business.

That customer sounds like they’ll be more trouble than it’s worth to deal with them.