WHAT YOU NEED TO KNOW ABOUT TARIFFS.
Tariff: a tax or duty to be paid on a particular class of imports or exports. Tariffs are used by governments to generate revenue or to protect domestic industries from competition.
Yes, we understand the meaning and the reasoning behind tariffs. Yes, our industry is involved in tariffs with particular exports. Yes, we keep our buyers and purchasing agents informed so they can make decisions best suited for their clients.
What is it that you and your purchasing department needs to know?
In early November, the Trump administration imposed tariffs on about $250 billion worth of imported Chinese goods, affecting about 6,000 items. With China being the #1 source for products produced and sold within the promotional products industry, this is having lasting effects on companies utilizing these products as marketing tools. What was once a cost saving way for suppliers to import quality goods and sell in this market, is turning into larger price increases than ever before seen in our market.
After reading up on tariffs and educating myself on what this means for our industry, two things stood out that I believe are of importance:
- Not all promotional items are subject to tariffs.
- It is not only new goods that are warehoused at a factory that are subject to tariffs. Previously imported items will also be tariffed it they in-fact fall into the category of items that have a tariff imposed on them.
WHAT OUR MANUFACTURERS ARE DOING
Understanding the tariffs will help buyers in making decisions for their companies on the goods and types of items they select for marketing initiatives. Many of our suppliers are handling the tariffs and their effects on their Chinese factories in a different way. The price increase itself is not always across the board for all the items in their inventory. However, how do they account and pass along those tariff charges in a way that makes sense not only for them, but also for their clients? We have seen a few different ways this is being handled… here are a few things you might see this year.
- Standard price increase across the board on all products; this may be a simplified version on how to handle tariffs, however, it is not always “fair” when looking at the products sold in one given catalog. Just because one product from a supplier is subject to tariffs, doesn’t mean they all are. Not all products are created equal…well maybe they are, but not in the eyes of the government! In this case, our team wasn’t sold on approaching tariffs with this method.
- Looking for a quote? RFQ it is!! No prices listed in catalogs…that is the second method we have seen. From a client or sales person’s perspective, this is not always the “easiest”, however it covers the vendor and supplier in the event that tariffs are lifted and they have printed all their catalogs. Since these tariffs are not set in stone, things can change. It would be a big waste to not be able to utilize printed materials because of something that you have no control over and may be changing at any moment. Save trees and go green!
- Tariff listings only on the products affected AND online only. As stated previously – tariffs are not imposed across the board on all products. We have seen a few of our suppliers list the tariff pricing on their websites below the product pricing so you are aware if there is a tariff on the item you are interested in and how much the product costs alone without that tariff. I personally like this scenario the best, as it gives you the opportunity to see what your item costs without that tariff involved…incase in the future they go away or change.
So what goods are affected and subject to tariffs?
Wool, cotton and denim apparel; leather items; rubber items; plastic rainwear; awards – quartz, marble, granite; paper products; dog accessories like leashes; bamboo and wood items, cork products; part for flashlights; magnifiers; bicycle and motor vehicle accessories; sound amplification products/speakers; golf bags; and more. The list in its entirety is very extensive. Above are some of the products and categories you will see affected.
WHAT YOU CAN DO
Knowledge is power, and the more you know the better off you will be in making decisions on the products to use for your marketing and promotional needs. Ask the question when you are selecting an item to be quoted. Is this affected by tariffs? If so, how much should I anticipate to be added to my bill? If you would like to avoid items that are subject to tariffs, make sure your distributor or representative is aware of that prior to placing your order so they can guide you in the proper direction.
WHAT WE ARE DOING
With an increasing number of products and offerings coming from overseas facilities and factories, tariffs are creeping into our industry, like many others. We work hard with our overseas vendors, trying to shrink the manufacturing costs of our goods so we can keep aggressive pricing without sacrificing the quality of our goods we offer.
Tariff Timeline (sited from www.asicentral.com)
April 2017: The U.S. Trade Representative investigates whether steel/aluminum imports pose a threat to national security.
August 2017: The U.S. begins a formal investigation into certain policies and practices of the Chinese government tied to technology transfer and intellectual property.
January 2018: President Trump issues a 30% tariff on solar imports after U. S. manufactures petition for relief.
March 2018: U.S. imposes tariffs on imported steel and aluminum from all nations, including China. In response to U.S. action on steel and aluminum, China places tariffs on $3 billion of U.S. goods.
May 2018: Joint talks in Washington leads to the U.S. agreeing to hold off on tariffs, as China says it will significantly increase purchases on goods made in the U.S.
June 2018: After disagreements about previous deals, the U.S. announces tariffs on $50 billion in imports from China. Trump announces the U.S. will put tariffs on another $200 billion of Chinese exports.
August 2018: Trump threatens to increase the proposed tariff on $200 billion of Chinese imports to 25%, up from 10%. China unveils a list of $60 billion worth of U.S. imports it plans to apply tariffs on if U.S. follows through on threats.
September 2018: Effective September 24, U.S. announced a 10% tariff on $200 billion of Chinese exports until the end of 2018. Tariffs will rise to 25% afterwards.