On July 6th, per the US Trade Representative Section 301, a 25% tariff will be imposed on specific products manufactured in China entering into the United States. The list included 818 product lines identified by HTS codes. (Click here to review List 1, List 2). This is a whopping 28 page long list that gets interesting on pages 17 – 19. This is where we see caps, resistors, transistors, LEDs, etc.
Many manufacturers, distributors, and other indusy organizations have been working to petition for exclusions of various products that are affected. To this point, they have not been successful in their petitions and are waiting for final determination on the second list of 284 products also being considered for additional tariffs.
Our suppliers are still working to understand/define their various approaches and the impact on specific franchised products sourced directly out of China.
We expect that we will soon begin seeing an extra ‘tariff’ line on invoices from our suppliers. Most (if not all) seem to be taking that approach rather than increasing product prices. The exception would be for parts where manufacturer has chosen to increase the piece part price. We’ll review these on a case by case basis.
We believe that keeping the tariff charge on its own line reduces the supply chain impact and is the least disruptive option from a systematic, accounting and process perspective.
Our approach will be to gather tariff costs associated with the material purchases associated with your orders then invoice for them at the end of each month. We do not intend to mark-up these tariffs.
This is a dynamic topic that will warrant updates as things evolve. Hopefully, these will be short-lived.