In March 2018, a 10% tariff on aluminum and a 25% tariff on steel coming into the United States from other countries was announced. Last year, China produced a whopping 49% of the world’s steel production. To put this into perspective, the U.S. was responsible for 5% of global steel production. Naturally, China is upset about these tariffs and has threatened to impose its own tariffs on certain U.S. imports. It seems that the United States could be on the brink of a trade war with China. This should be of particular interest to many private label sellers since a good number of their products—if not all of them—come straight from China.
What are the general effects of the tariff?
It may not seem like a tariff on these materials themselves would make much of a difference, but when you stop to consider how many products consist of steel and aluminum, the indirect effect becomes apparent. For example, products like aluminum cans, gum and chocolate wrappers, electronics, and cars, to name a few, depend on these materials. We could see higher prices for these products in the near future.
What about steel and aluminum from other countries?
As of May 31, 2018, temporary exemptions from U.S. tariffs on steel and aluminum expired for Canada, Mexico, and the EU as well. China, the EU, and other areas have threatened to respond in kind to the tariff by imposing import taxes on United States products like soybeans, cars, airplanes, and more.
What products are included in this?
Anyone importing products from China for their private label business should be aware of the current tariffs as well as those threatened as retaliation. A few of the products currently affected include caps, lids, seals, stoppers, and other closures, any noncellular vulcanized rubber other than hard rubber, non-electric storage water heaters,fire extinguishers, brewery machinery, textile printing machinery,molds for rubbers or plastics (injection or compression types, other than for shoe machinery or for manufacture of semiconductor devices), dental cements, iron or non-alloy steel semi-finished products, and more.
But what does it mean for my private label products?
Most Amazon sellers won’t see a direct impact from these tariff changes. Most of the items subject to the 25% tariff are machinery, parts, and injection molds. Finished products such as consumer electronics, watches, apparel, kitchen utensils, toys, and accessories are not subject to this tax. Most of the impact will be indirect, due to prices possibly being driven up by manufacturers looking to make up the 25% tariff.
How can I protect my private label business?
There is always the possibility of additional tariffs. Private labelers should keep abreast of the situation and pay attention to what’s coming down the pipeline. Identify your biggest sellers and keep an eye on the coming negotiations and discussions. For example, if certain Chinese-made textiles play a big part in your private label business, you’ll want to listen for any possible new tariffs on textiles in general. If worse comes to worst, consider other sources for certain products, such as Vietnam or India.
What else do I need to know?
China has recently put new rules into effect dealing with their Customs Manifest, which applies to imports and exports. New mandatory elements are:
- A precise description of the cargo
- Shipper company code
- Shipper phone number
- Consignee company code (In the U.S., the company code is your EIN.)
- Consignee phone number
- Consignee contact person
The bottom line is this: most importers and private label businesses shouldn’t see too much of a negative impact due to these tariff changes. Don’t let what may or may not happen affect your dream of private labeling. You can overcome whatever obstacles come up because we’re right here by your side the whole way through.
Just reach out whenever you need us.