Uncertainty in vendor relationships.
Welcome to life in the age of heightened tariffs.
When the Trump administration announced new tariffs with China in August of 2018, I was optimistic that this was a short-term problem that would resolve itself in short order before many of my clients felt any significant impact. Regrettably, we’ve had no such luck. The administration seems to be digging in its heels, announcing successive waves of new tariffs that have expanded both the scope of goods affected and the degree to which they’re affected.
Small businesses are beginning to feel the crunch, so I’m diving in to help decode the impact these new tariffs are having on our community.
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.
That might sound good in theory, but tariffs aren’t generally welcome news within the small business community, and economists have been putting in some serious overtime to analyze the current situation and fact-check the administration. No matter where you fall on the political spectrum as a voter, these tariffs are likely coming home to roost for you, too. I surveyed my community this week and discovered that 46% of my clients have already felt the squeeze.
WHICH PRODUCTS ARE AFFECTED BY TARIFFS?
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