Tariffs: What You Need to Know and How They May Impact Your Business
New tariffs – which are additional taxes imposed on imported goods and services – are making it more expensive to bring certain imports into the United States to sell.
To understand how your business may be impacted, it’s important to know about the tariffs that are influencing our industry.
Tariff on Raw Materials
The first involves a tariff on raw materials (imported steel and aluminum, specifically). This tariff directly impacts products that are made with these materials, including wire, cable, conduit, racks and cabinets, etc. Steel imports are currently being taxed at 25%; aluminum imports are currently being taxed at 10%.
The tariff has increased demand for U.S. vs. imported steel and aluminum. Because domestic supply hasn’t accelerated to keep up, however, this increases pricing for U.S. materials as well. Even if you’re using domestic steel and aluminum, you may still notice material price increases as a result.
Tariff on Finished Goods
The second aspect involves a tariff on imported finished goods, such as lighting fixtures, copper and fiber connectivity, and solar panels. Imported finished goods are currently being taxed at 25%.
This tariff impacts goods from companies that outsource their manufacturing primarily to China at this point in time.
The Financial Impacts of Tariffs
These tariffs invariably lead to price increases from our suppliers. Several product suppliers have created teams of people responsible for tracking and auditing the tariff dollars that are being paid to our government.
Because our suppliers can’t fully absorb these costs, the fees are passed down the chain. For this reason, the prices we’re used to paying for certain products are changing – and will continue to change in the near future. These tariffs not only impact Van Meter, but also our customers.
Van Meter understands and supports the price increases that our suppliers are implementing due to the new tariffs. The additional costs being placed onto imported raw materials and finished goods primarily from China are a financial burden for everyone involved. In cases where our customers will be significantly impacted by these tariffs, one-on-one conversations need to take place to discuss what’s happening – and why.
To date, there are still lots of questions; no one knows how long these tariffs will continue, or which additional goods and services may see tariffs down the road and what imports from other countries may be effected.
As these tariffs impact our industry and, ultimately, your business, Van Meter will continue to keep you informed. If you have any questions, send us a note and we’ll be happy to help.
Article by Brian Bytnar, Chief Development Officer, Van Meter Inc.