Effective December 15, 2019 the new List 4 tariffs will go in to effect, essentially placing 15% tariffs on most imports not already previously included on Lists 1-3. As these tariffs effect most imports from China, being prepared with a plan to handle the increase is essential. So what do you do?
First and foremost, figure out if you’re affected. The easiest way to do this is to pull all your HTS Codes for any expected China exports, and compare them directly against the Government Lookup Tool. If your HTS code shows up on a list, particularly List 4B, then you are likely affected by this change.
I’m affected – now what?
First off, consider importing enough product to get you through as much of Q1 2020 as is feasible before the December 15th deadline. This may require a bit more analysis than you might think, because unfortunately Oct-Dec is peak shipping season, and so prices will be higher. You need to crunch the numbers to make sure you don’t rob Peter to pay Paul on this one, but with most tariff hikes in the 15% range, most likely you’re still better off bringing products in sooner.
Should I look into alternative manufacturing sites?
To state the obvious, this is an individual business decision, and there are too many factors for me to pontificate very far. But hell, lets do it anyway.
If you have any existing relationships outside China, then you should certainly consider leveraging those to see “what if” (duh!). Run a small sample order, or just get a quote. And for the love of shipping, don’t forget to include a freight cost analysis in your numbers. Savings 15% of tariffs does you no good if you pay 40% more in freight.
If you don’t have an existing relationship, then it’s probably time to start looking into finding one. To be clear, I am not saying moving your manufacturing is a good idea (yet), but if nothing else the recent climate has shown that having a plan B never hurts.
What else?
Finally, we’re here to help. If you are considering increased shipments, or alternative sources let us know. We can help you estimate the freight costs and figure out the most effective solutions! What good is a freight partner if they don’t help out in these situations?
