China Crisis
[dropcap]P[/dropcap]resident Trump’s proposed tariff on products imported from China will have a negative impact on the lighting industry – from suppliers and manufacturers to distributors and end-users – but by how much will be up to individual companies, who must decide whether to pass along the price increase to their respective customers or eat that cost in order to remain competitive.
While intended to close the trade gap between goods made in the U.S. versus China, enforcement of these tariffs will make business harder for companies that either manufacture or purchase lighting products and ceiling fans from China.
By August 1, the Office of the United States Trade Representative (USTR) had finalized a second round of products (grouped into Lists) imported from China that will face up to a 25-percent tariff. Next up is List 3, which – as of press time – was still open for review. Eric Jacobson, President & CEO of the American Lighting Association (ALA) and Michael Weems, ALA’s VP/Government Engagement urged the ALA membership to individually submit their comments to the USTR, detailing how the proposed tariffs will negatively impact their livelihood. The ALA provided a simple cut-and-paste template for its membership to fill out.
At press time, Eric Jacobson was set to testify against the potential tariffs at the China 301 Committee hearing in Washington D.C. on August 22. He released this statement, “Although ALA agrees that the Administration needs to negotiate with China on intellectual property theft, ALA strongly opposes any proposed tariff that will raise consumer prices; have a negative effect on lighting, controls, and ceiling fan sales; and ultimately, have a severe negative effect on the economy and jobs.”
In reaction to the impending tariffs, lighting manufacturers have begun sending out notices in August announcing either price increases or warning of price increases to come.
There are also some manufacturers and retailers who saw the writing on the wall and began proactively making changes over one year ago regarding where their products are made. For example, Zuo Modern recently established an upholstered furniture line that is made in Mexico instead of its factory in China, and some retailers began increasing the amount of domestically made products they offer.
Commenting on List 3, National Retail Federation (NRF) President & CEO Matthew Shay said, “This list specifically hits consumer products that have nothing to do with the ‘China 2025’ initiative. These punitive tariffs will be passed along to U.S. consumers and will undo all the positive gains the economy has made in recent months.”
Selling lighting and furniture is challenging enough without the deterrent of tariffs raising prices. Are you taking action to combat the inevitable price increases? Tell us what you think. We will keep you up to date on the outcome of List 3 and the products affected in the months ahead.
