$2.6 Billion (November Newsletter)
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Shocking! The Outdoor Industry Alliance recently reported that the increase in China tariffs has reached $2.6 Billion in this year. Yes, the INCREASE in tariffs for all China made goods in the outdoor sector. The monthly 2019 September tariffs paid by the Outdoor industry topped $1 Billion for the first time. Contrary to claims from Washington DC, these tariffs are not paid by China, they are paid by you or us, certainly not them.
In case you have lost track, the 301 Code calls for a 15% tariff on top of existing current import duties commencing December 15. For instance, the net effect might move some hiking boots in to the 50% total import duty range... backpacks at 45% and so on.
There have been significant problems with China trade, especially for companies with technical IP. The China government has “shared technology” requirements that really means “steal technology.” Companies in the tech sector are hard hit by this… and it’s not right. But leveraging this into an outright trade war has already hit bottom lines hard here in the US as non tech companies have attempted to mitigate the retail pricing impact by asking for lower first costs in China and moving to blended retails here in the US, increasing all retail prices including products made in countries other than China.
OIA describes the upcoming tariff increases as an “avalanche.” Make no mistake: margins will shrink. Retail prices will rise very dramatically. Sales will fall proportionally. And our world, our outdoor, sport and active space will be hard hit.
Our SDSI community is trying to help mitigate… we have member companies who specialize in strategic manufacturing. We have section 321 tariff code specialists making it possible to avoid all tariffs on certain B to C transactions. We have a good network of import specialists. We will continue to try to provide correct information. But our best hope is the obvious one: let’s get this trade war over. It’s hurting all the wrong businesses. California is not too popular in DC these days, but letters to Senators and Representatives can keep these issues foremost in their minds.
I feel like I have been restrained with my language. I am an optimist, love of all things San Diego, a proud Californian and no Debbie Downer, but the state of “things” is not optimal. Let’s all make our voices clear and get back to business, profitable business!
bob
