Tariffs: Tips On How to Prepare For and Manage The Latest Waves of Tariffs
Tariffs – additional taxes imposed on imported goods and services – are making it more expensive to bring certain imports into the United States to sell.
What Products Are Affected
To understand how your business may be impacted, it’s important to know about the tariffs influencing our industry:
- Raw Materials: This tariff impacts products made with imported steel and aluminum, including wire, cable, conduit, racks and cabinets, etc. Steel imports are being taxed at 25%; aluminum imports are being taxed at 10%. The tariff has increased demand for U.S. steel and aluminum, but domestic supply hasn’t accelerated to keep up, increasing prices for U.S. materials.
- Finished Goods: Imported finished goods, such as lighting fixtures, copper and fiber connectivity, and solar panels, are being taxed at 25%. This tariff impacts goods from companies that outsource manufacturing to other countries.
- Chinese Imports: A 10% tariff is in effect for 5,000+ products imported from China. (In May 2019, this increases to 25%.) Half of these imports are considered “intermediate goods” or products used to produce final goods like electronic components and machinery parts.
The one thing these tariffs have in common? They all lead to price changes in our industry. Once the products arrive at U.S. ports, our suppliers have no other option but to pay the tariff. Suppliers can’t fully absorb these costs, so fees are passed down the supply chain.
How You Can Prepare
The additional costs of imported raw materials and finished goods are a financial burden for all of us. Every company, distributor, and manufacturer is dealing with these frustrations. But there are a few things you can do to get ready:
- Evaluate your inventory and buy what you need early (and in large quantities) to offset the financial impacts of purchasing items later. This can also help protect you against additional tariffs that may come into play.
- Request early releases or hold-for-release orders to avoid losses.
- Anticipate price fluctuations and help others in your organization understand that there needs to be flexibility when it comes to accommodating higher costs.
- Ask questions and request clarification. Van Meter is happy to answer honestly, help evaluate your inventory, and find solutions to help you deal with increasing prices.
As more tariff changes are announced, we’ll keep you updated on their impacts – and what you can do to be prepared. Questions? Call us at 1-800-247-1410.
EMPLOYEE-OWNER, SALES SUPPORT MANAGER
Edkin joined Van Meter in 2015 and has spent more than 10 years helping customers and employees find solutions to improve ROI.