I usually avoid posting anything related to politics (not even on my personal FB page), but today I want to share some important information. In case you were not aware, Trump’s new tariff rules may impact your business.
Shipping and receiving overseas goods can be a complicated process, but the new policy may make this even more complicated … and expensive!
Since I am not an expert on this subject, I would like to quote an article by Lela with Lucky Break Consulting:
What is a tariff
Tariffs are a kind of tax leveraged on a particular category of imported goods. The amount of the tax depends on many factors, including the type of products you (or your suppliers) are importing and the country in which those goods originated. These charges are collected by U.S. Custom and Border Protection agents at all U.S. ports of entry, and the funds are deposited into the U.S. Treasury.
Tariffs aren’t some new taxation scheme. They were first introduced by the U.S. government in 1779, but 2018 saw a flurry of new tariffs assigned to Chinese goods in an attempt to “level the playing field” while renegotiating international trade agreements….
There have been several waves of new tariffs enacted by the administration, with the most recent taking effect on January 1, 2019. Many basic supplies used by artisans were included in recent tariff expansions, including:
- Cotton Fabrics
- Glass containers
- Metal containers
- Citric acid + many common personal care ingredients
- Pigments, dyes, inks, paints
- Glass beads
Many of us mistakenly believe that we’ve dodged a bullet because we don’t import directly. Unfortunately, the tariff system is in motion regardless of whether you source directly from China or purchase from a vendor that does. It all trickles down in the end, and so many of the raw materials we use in our creations originate abroad….
Lela continues by sharing some personal stories on how these tariff rules impacted several small businesses. One particular producer explained the details of a shipping quote she received earlier in 2018. When it shipped, the order was subjected to an additional 10% tax which would increase to 25% in 2019.
So what can you do? Lela goes on …
MINIMIZING THE IMPACT OF TARIFFS ON YOUR BUSINESS
While the future of the actual tariff system lies in the hands of politicians, there are several proactive steps we can take to ensure stability within our businesses.
MAKE A “PLAN B” LIST OF SUPPLIERS. It’s always wise to have multiple vendors for every raw material and/or finished product in your inventory, but that “Plan B” becomes increasingly important in times of escalated trade tensions. Carve out some time to price shop and discover alternatives.
DOUBLE-CHECK YOUR PRICE STRATEGY. If you’ve been operating on too-slim margins, then the increased costs will quickly drain all traces of profit. I recommend keeping a close eye on your product costs, auditing them quarterly to ensure that you have ample markups for both retail and wholesale distribution. …
CONTACT YOUR REPRESENTATIVES. This is, essentially, a political game. If you’re displeased about the country’s new take on international trade, then make your voice heard. Share your personal story and provide as many specifics as possible to help legislators understand the real impact of their policies.
STAY AHEAD OF YOUR INVENTORY. By their very nature, tariffs cause the supply chain to slow, and more complicated paperwork only amplifies the effect. Closely monitor your own inventory and plan to order further in advance than you’re accustomed to in order to prevent lags in availability.
This is just a excerpt of the original article. I highly recommend you read Lela’s entire article.