For years, China has been the go to place to get almost anything manufactured. That could be in jeopardy with the recent USA trade talks with China underway. Many people are wondering how it could impact the prices and shipping from China.
According the Bloomberg, USA is determined to increase tariffs and levies on $200 billion of Chinese imports. Currently, the proposed tariff percentage was set to 10%, the newly proposed raise will bump it up to 25%. This has lead China to take retaliatory action against these and apply its own tariffs on US goods.
This back and forth has been happening over the past few months and nothing has been confirmed yet. China believes that through talk and negotiation, these trade discussions can be finalized.
Tariffs are basically tax on goods coming into a country and are paid upon entering the country, kind of like border crossing for goods. The customs broker or agent, (typically a courier service or registered agent) will pay these and any other additional fees.
The idea of these tariffs is to make local made options a better alternative and support local businesses.
These tariffs will impact a range of intermediary goods/parts (partially completed products). Most businesses that utilize the cost savings from China have certain portions of a product made there and then finished in either its country or another location.
Depending on how trade talks continue, it could impact the cost of goods and shipping from China. A 10% – 25% hike in prices may not necessarily detour companies from the US to stop its business with Chinese manufactured goods, but it will raise the price of products on the shelves of stores. For products, the easiest way to see the tariff effect is by looking at the cost per good.
Depending on the industry, some vendors will opt to push the price increase on its buyers. For price sensitive products like low cost goods, stores may opt to eat the cost to keep customers happy.
Regardless of who assumes the cost, tariffs will impact the marketplace and consumer habits. It can be especially difficult for small businesses that already make slim margins. They may need to investigate other alternative suppliers located in different countries, lay-off part of its work-force, down-size and move, and various other consequences.
These tariffs will generally mean that the cost of products will be higher, or businesses will be less willing to offer discounts. Customers may also see the cost of shipping from China to be slightly increased to reflect the price increase.
Major online stores like EBay or Amazon will also be compliant with these and depending on the seller, customers will see a price hike in either shipping or the base cost meaning passing the cost onto customers.
It may be difficult to avoid tariffs altogether. The reason being, tariffs applied from the country of origin will be charged the moment it crosses into China or the US.
A possible solution is to store inventory in virtual mail boxes. Having your products sent to virtual mailbox (like Reship) located outside of the US or China can let businesses store inventory without additional tariffs. This doesn’t mean that businesses can avoid tariffs entirely, but the tariff will only apply to products entering either country. This means that businesses have an option to sell internationally, tariff free.
Using these benefits from Reship could greatly benefit businesses by reducing cost of shipping, decreasing or possibly eliminate tariffs due to its multiple locations, and create lasting partnerships to better service customers.