The 2018 Tariffs & the Impact on Your Business

The Impact of Tariffs on Your BusinessFor the last several months, talk of tariffs has been ever-present in the news, and perhaps even in your business. In simple terms, a tariff is an additional fee imposed on goods which are imported into the United States. Earlier this year, tariffs were put in place for a variety of raw materials and finished goods from a number of regions around the world, increasing the costs to bring certain items into the country.

You may be wondering how this will affect your business. In order to begin to develop an outlook on this issue, it’s important to know what types of items are subject to tariffs and how they relate to your overall business.

Finished Goods

Finished goods are defined as products which have been completed in the manufacturing process and are being held in inventory to sell either through distribution or directly to the end user. Examples of finished goods include light fixtures, motors and solar panels, which you may purchase from French Gerleman, as well as consumer items such as washing machines and televisions.

The United States imports a good deal of these types of items from China. The current tariff on these goods is 25%.

Raw Materials

A raw material is an item that goes into the manufacture or production of finished goods. This category is notable for French Gerleman and our customers, as it impacts many of the staples that we provide for your projects such as cable, wire, conduit, strut and enclosures.

The current tariff on raw materials is 25% for steel and 10% for aluminum.  While these materials are available in the United States, supply is short and the prices are increasing along with demand.

What This Means for You

We currently find ourselves in an environment of rising costs for both finished goods and raw materials. Our suppliers are paying more, and as a result, everyone throughout the supply chain is faced with higher prices for the items that are vital to your business operations. You may have noticed changing prices on recent invoices, or even line items disclosing the tariffs which are being imposed on your purchases. Unfortunately, these increases and fees are unavoidable.

We at French Gerleman understand the financial challenges this may pose to your business, and for your customers. We don’t have all the answers to questions surrounding how long these tariffs will be in place, or what the long-term market implications might look like, but we’re committed to standing together with you in this journey and keeping you informed.

If you are open to substitutes, we can identify alternate products without a tariff, when available, upon request.  Please contact us or reach out to your Account Manager if there are specific situations you would like to discuss.  We’re here to help and support you through this period.