The Trouble with Tariffs
Our intro blog post about the possibility of increased tariffs is now not just a warning. They are here, and they are blanket tariffs not targeted to specific sectors. A 10 percent charge on goods imported from China went into effect and many e-commerce merchants are wondering how that may impact them.
Initially intended to apply also to goods from Mexico and Canada, those tariffs are temporarily delayed. But China is the most prolific source for everyday consumer goods, what most e-commerce merchants like you sell.
Consumers may individually purchase online from China without penalty. The Trump administration has limited them to large-scale sellers. That means anyone who imports in bulk should pay attention. Even if you’re a small-time e-commerce seller, this probably will mean you will see a hike in your purchase costs if you resell from a wholesaler.
A third-party logistics company is not optimistic.
“We're going to see higher prices for consumers, period, Maggie Barnet, CEO of LVK, a third-party logistics company, told Scripps News. ‘That's going to happen. That's the easiest way to solve this issue for those brands.’”
Concern over wholesale and retail price increases vary from importer to importer, with very large sellers finding ways to absorb the tax-like tariff issue. Those who are selling on a smaller scale might want to do some research.
MINIMIZE IMPACT
Considerations include gathering as much information as you can to avoid a disruption to your business. If your supplier decides against wholesale purchases in the near future, you could be in a position to refund pre-paid orders. The entire picture is up in the air at this point, somewhat confusing and unstable.
One way to ride the chaotic wave is to localize inventory. If smaller shipments arrive at our ports of entry, it’s less likely they will be hit with punitive tariffs. The problem with that is you have no control over how your wholesalers navigate this.
Our tip? Contact your source. See if they will update you on their purchasing plans. You may be better prepared for an upcoming increase in your purchasing price, which often leads to an increase in your customers’ prices. The inherent problem here is that you are at the mercy of your pre-sellers as to whether they will experience a significant supply chain disruption. Again, that may lead to angered customers.
We suggest you craft a definitive message, placed prominently on your website, announcing the possibility of unstable pricing. This could alleviate unhappy buyers. It could also drive them to not purchase from you at all. The statement should also assure their ability to be refunded if necessary. But first, make sure you are in good financial standing to make that happen.
Of course, if you resell domestic goods, this issue will not be a problem. But you may carry a product or line that is in high demand, and is only available from China. In that case, an order you put in may not arrive if the high-volume shipper decides to let it sit at ports rather than pay tariffs. It’s in your best interest to stay informed and to inform customers.
Photo by Paul Teysen on Unsplash