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Tariffs on electronic good
Over the past year, tariffs have been implemented on a range of imported goods to the U.S., including LED video wall panels. Panels, such as those made by Minneapolis-based THOR, are assembled in the U.S., with parts sourced globablly, thereby reducing the effect of the recently imposed tariffs.

Tariffs: Planned Increase Delayed, But 25 Percent Likely

Already, there have been price increases by many manufacturers on their goods as a result, while others have held off, in the hopes that the tariffs will soon be rescinded.

Tariffs … the war that has no casualties, or does it?

We are now officially one year into these recently imposed tariffs, with the first round coming last Jan. 22, when tariffs were added to washing machines and solar cells.

We are now well into the trade spat between a number of countries across the globe, with two leaders in particular who are set on winning.

How will it play out, and what are the likely outcomes, for those of us looking to purchase new technology equipment in the coming months?

We are now officially one year into these recently imposed tariffs, with the first round coming last Jan. 22, when tariffs were added to washing machines and solar cells. 

By March, steel and aluminum had been added among the products with tariffs included.  The middle of June brought on new tariffs on $50 billion worth of goods, then July added another $34 billion worth, while August added another $16 billion to the list, and by September of last year, it was on a list of goods $200 billion long.

The last list covered a wide range of tech related gear, like LED lights, video walls, TVs, projectors and many other goods. 

That $200 billion in tariffs was set at 10 percent extra, with the original plan for it to rise to 25 percent on Jan. 1 of this year. With the initiation of some trade talks, however, that has at least delayed the rise to 25 percent, until at least March 1.

Many of you may be asking – how does this affect me, and why should I care?  Already, there have been price increases by many manufacturers on their goods as a result, while others have held off, in the hopes that the tariffs will soon be rescinded.

The important thing is to know that the timing of how the tariff is paid and who actually pays it, is valuable information. 

The tariff is assessed as goods first touch U.S. soil, by U.S. Customs.  The tariff is paid by the importer, so in effect, the tariff amounts to a tax on U.S. businesses that buy goods from China, for example.

How does China pay?  By reduced sales to the U.S. … and U.S. companies looking for suppliers from other countries that can offer the same (or similar) goods without the tariff.  The issue with that, though, is the time it takes to develop a relationship with a different factory and have your goods produced are not very quick to change, and there are significant costs involved.

Ultimately, the tariff is a tax that will be passed on to U.S. consumers of those goods that are impacted by tariffs.

With the couple months of an extension before the second tier of a tariff increase is slated to occur, could the jump up to 25 percent be avoided?  If I had to guess, based on the history, I would say it is expected.  If it does come to pass, plan to see some substantial price increases on those goods, as many companies have chosen to absorb much of what amounts to a 10 percent tax, but a 25 percent tax will wipe out a company’s profitability and their ability to serve you, if they plan on not incorporating some increase to combat such a significant tariff jump.

Is there a chance these recently implemented tariffs will go away?   There is, but I see the likelihood as low for the near- to mid-term.  Even if the 10 percent tariff drops to 0 percent at some point, there is little chance that the recent price increases resulting from that first round of an increase, will reverse in response.  I believe prices that have gone up, will remain largely unchanged if the tariffs are ended.

How do you hedge the potential for a cost increase?  Decide on what you are looking to purchase and make those decisions to buy now, to avoid the future increase.

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