Copier Parts & Accessories China Tariff Starts in 9 Working Days

Thanks SSG and Art for keeping us up to speed on what others may not!

China retaliated to the new US $200 B worth of tariffs with $60 B worth of new 10%  tariffs on USA made goods sold in China. This move is in defiance of President Trump's threat to raise the tariff on Chinese goods to 25% on Jan 01 2019 if China retaliated.

Art Post posted:

SalesServiceGuy posted:

President Trump announced today, effective Sept 24 2018, a 10% tariffs on a broad list of $200 B worth of Chinese goods.

https://ustr.gov/about-us/poli...inalizes-tariffs-200

On this final list are all forms of copy devices.  No mention of printers.

Unless China makes serious trade concessions to the USA, without retaliatory tariffs of its own on USA made goods sold in China,  the 10% tariff will rise to 25% on Jan 01 2019.

These devices are on the final tariff list, published Sept 17 2018

8443.39.20 Electrostatic photocopying apparatus, operating by reproducing the original image via
an intermediate onto the copy (indirect process)
8443.39.30 Photocopying apparatus, other than electrostatic, incorporating an optical system
8443.39.40 Photocopying apparatus, other than electrostatic, of the contact type
8443.39.50 Thermocopying apparatus
8443.99.10 Accessory & auxiliary machines intended for attachment to an electrostatic
photocopier & which do not operate independent of such copier
8443.99.30 Parts of facsimile machines specified in additional U.S. note 3 to this chapter

Although copier manufacturers might be able to absorb a 10% increase to their cost of goods entering the USA, I seriously doubt they could absorb a 25% tariff. They will be forced to pass this cost onto their distribution partners and ultimately you as a copier salesperson and finally to your customers.

As all tariff revenue goes directly into USA gov't general revenues, tariffs are essentially a form of hidden taxation on the American consumer.

SSG

Thanx for keeping this thread up to date!  Kudos

The economy is doing so well here in the US that I don't think many will care.  I will use this to my advantage to get clients to move now. Now, I hope they do care!

Art

SalesServiceGuy posted:

I can imagine your "spin" to customers already.  There is certainly a big sales hammer to close deals by Dec 31 2018.

Probably some manufacturers "stuffed" their warehouses with product in anticipation of this tariff.

Probably by Feb March 2019, if things go completely sideways, prices have to rise as inventory in the USA is depleted and new product is introduced.

Yup, it's a pretty BIG Hammer!  I heard a radio report that the US trade debt rose significantly in July. I'm thinking what you stated is that "many of the manufacturers have stuffed thier warehouses".  That's probably why we haven't seen anything to date with increases.

I can imagine your "spin" to customers already.  There is certainly a big sales hammer to close deals by Dec 31 2018.

Probably some manufacturers "stuffed" their warehouses with product in anticipation of this tariff.

Probably by Feb March 2019, if things go completely sideways, prices have to rise as inventory in the USA is depleted and new product is introduced.

SalesServiceGuy posted:

President Trump announced today, effective Sept 24 2018, a 10% tariffs on a broad list of $200 B worth of Chinese goods.

https://ustr.gov/about-us/poli...inalizes-tariffs-200

On this final list are all forms of copy devices.  No mention of printers.

Unless China makes serious trade concessions to the USA, without retaliatory tariffs of its own on USA made goods sold in China,  the 10% tariff will rise to 25% on Jan 01 2019.

These devices are on the final tariff list, published Sept 17 2018

8443.39.20 Electrostatic photocopying apparatus, operating by reproducing the original image via
an intermediate onto the copy (indirect process)
8443.39.30 Photocopying apparatus, other than electrostatic, incorporating an optical system
8443.39.40 Photocopying apparatus, other than electrostatic, of the contact type
8443.39.50 Thermocopying apparatus
8443.99.10 Accessory & auxiliary machines intended for attachment to an electrostatic
photocopier & which do not operate independent of such copier
8443.99.30 Parts of facsimile machines specified in additional U.S. note 3 to this chapter

Although copier manufacturers might be able to absorb a 10% increase to their cost of goods entering the USA, I seriously doubt they could absorb a 25% tariff. They will be forced to pass this cost onto their distribution partners and ultimately you as a copier salesperson and finally to your customers.

As all tariff revenue goes directly into USA gov't general revenues, tariffs are essentially a form of hidden taxation on the American consumer.

SSG

Thanx for keeping this thread up to date!  Kudos

The economy is doing so well here in the US that I don't think many will care.  I will use this to my advantage to get clients to move now. Now, I hope they do care!

Art

President Trump announced today, effective Sept 24 2018, a 10% tariff on a broad list of $200 B worth of Chinese goods.

https://ustr.gov/about-us/poli...inalizes-tariffs-200

On this final list are all forms of copy devices.  No mention of printers.  No mention of toner.

Unless China makes serious trade concessions to the USA, without retaliatory tariffs of its own on USA made goods sold in China,  the 10% tariff will rise to 25% on Jan 01 2019.

These devices are on the final tariff list, published Sept 17 2018

8443.39.20 Electrostatic photocopying apparatus, operating by reproducing the original image via
an intermediate onto the copy (indirect process)
8443.39.30 Photocopying apparatus, other than electrostatic, incorporating an optical system
8443.39.40 Photocopying apparatus, other than electrostatic, of the contact type
8443.39.50 Thermocopying apparatus
8443.99.10 Accessory & auxiliary machines intended for attachment to an electrostatic
photocopier & which do not operate independent of such copier
8443.99.30 Parts of facsimile machines specified in additional U.S. note 3 to this chapter

Although copier manufacturers might be able to absorb a 10% increase to their cost of goods entering the USA, I seriously doubt they could absorb a 25% tariff. They will be forced to pass this cost onto their distribution partners and ultimately you as a copier salesperson and finally to your customers.

As all tariff revenue goes directly into USA gov't general revenues, tariffs are essentially a form of hidden taxation on the American consumer.

China retaliated this AM by placing a matching 25% tariff on $16B of US goods.

We will see if the US escalates the trade war again putting copiers/printers manufactured in China imported into the USA back at risk for a 3rd time.

The Trump Administration announced today what they call a second tranche of tariffs against goods manufactured in China subject to 25% effective Aug 23.

I think the copier/ printer industry once again escaped a direct hit.

"8443.99.40

Parts of photocopying apparatus of subheading 8443.39.20 specified in additional U.S. note 4 to this chapter"

Would be nice if they could put some mfg plants in north america

I read past the "bill" description too fast.  A bill is not law, it is, I think, just an expression of unanimous opinion by the Senate.

Somewhere in the news this week, I read that Kyocera intends to increase production of A3 copiers in China by expanding a current factory.

I am sure all copier manufacturers plan 10+ years into the foreseeable future and cannot worry about politicians who could come and go every four years.

SalesServiceGuy posted:

With no debate, the US Senate unanimously passed a bill that would cut or eliminate tariffs on toasters, chemicals and roughly 1,660 other items made outside the United States.

Nearly half of those items are produced in China, according to a Reuters analysis of government records.

One can only hope that copy/ print devices and their parts and consumables have had their tariffs eliminated.  Since there are no manufactures of copiers/ printers on US soil, I do not know from whom the proposed tariffs are suppose to protect other than to be a money grab for US Gov't general revenues.

The final answer will not be known until the end of  August.

https://www.cnbc.com/2018/07/2...f-chinese-goods.html

 

SSG I checked here and there is nothing new at least about the recent passing of the Senate bill.  https://ustr.gov/about-us/poli...ffice/press-releases

I believe that Trump would still have to sign the bill and there is nothing about the House of Representatives either.  It doesn't look good

With no debate, the US Senate unanimously passed a bill that would cut or eliminate tariffs on toasters, chemicals and roughly 1,660 other items made outside the United States.

Nearly half of those items are produced in China, according to a Reuters analysis of government records.

One can only hope that copy/ print devices and their parts and consumables have had their tariffs eliminated.  Since there are no manufactures of copiers/ printers on US soil, I do not know from whom the proposed tariffs are suppose to protect other than to be a money grab for US Gov't general revenues.

The final answer will not be known until the end of  August.

https://www.cnbc.com/2018/07/2...f-chinese-goods.html

"Tariffs have a way of redirecting business"

Tesla announced yesterday plans to build a new car factory in Shanghai, China in part to escape potential US tariffs on auto parts and battery supplies.

https://www.nytimes.com/aponli...-as-china-tesla.html

I can only guess that it would take years and much capital and energy to start or relocate a new copier factory outside of China.  The Philippines is currently an important manufacturing hub for A4 printers and MFPs due to low labor costs.  Most A3 copiers are manufactured in China.

Many copier manufacturers only offer their dealers best price on new hardware and supplies if they meet specified purchase targets.

Used or refurbished copiers are not able to keep pace with customer preferences for mobile and Office 365 scanning and printing.

I, for one, don't care much what Ricoh thinks about my selling options.

Tariffs also have a way of redirecting business decisions. China may sease to be a viable place for manufacturing. No manufacturer has 100% of their maunfacturing being done in China. No matter what, the effect of any tariffs will be watered down by whatever manufacturing that is being done elsewhere.

I would really love to see something that tells what % of manufacturing is being done in China broken down by manufacturer. If Ricoh is 50% and Samsung is 0% for instance, I would say that it could cause a shift in the competitive marketplace.

SalesServiceGuy posted:

You can call it whatever you want tariff/ tax but if your cost of goods increases by up to 10% this fall solely due to actions by the Trump Administration we will see if you feel the same by Jan 2019.

You seem a bit naive in thinking that a tariff is not a tax.

I am sure Ricoh will not share you opinion on selling less new equipment in favor of used gear.

Trump is doing the right thing. As far as Ricoh is concerned, I couldn't care less of their opinion. It's all about putting food on the table for our families.  

You can call it whatever you want tariff/ tax but if your cost of goods increases by up to 10% this fall solely due to actions by the Trump Administration we will see if you feel the same by Jan 2019.

You seem a bit naive in thinking that a tariff is not a tax.

I am sure Ricoh will not share you opinion on selling less new equipment in favor of used gear.

It seems the prospects of tariffs going away anytime soon are fading.  Eventually the cost of most goods in the copier industry are going to increase because of President Trump.

SSG

I'm okay with this!  This may help in the long run because more clients may opt for something off lease, or even release their existing devices. In both cases I'll probably make more than selling new.

You keep calling it a TAX, it's not a tax it's a tariff.  When I go to the store and pay for an item, a tariff is not added, tax is added

Just from a quick read, the tariff on these additional lines would be 10%, not as bad as the 25%.  

I've also asked many dealer principals and it seems that most manufacturers are not saying anything at this time about raising prices. I do find it quite odd though.

The Trump Administration today announced plans for a new round of $200 Billion worth of tariffs against China.

https://www.cnn.com/2018/07/10...ffs-trump/index.html

Copy machines were on the original list but but were taken off leaving parts and consumables subject to a 10% tariff. It seems most suppliers have not taken actions to increase their prices.

On the new list which could go in effect sometime after Aug 30th are:

8443.39.20
Electrostatic photocopying apparatus, operating by reproducing the original image via an intermediate onto the copy (indirect process)


8443.39.30
Photocopying apparatus, other than electrostatic, incorporating an optical system


8443.39.40
Photocopying apparatus, other than electrostatic, of the contact type

https://www.cnbc.com/2018/07/1...lion-in-tariffs.html

Sounds like a modern MFP/ MFD to me. Dealer cost could increase in price by 10% this fall. I suspect manufacturers will eat at least 5% so as to not loose market share.

Remember cost price is not the sell price so price increases to end users of 6.25% to 12.5% are certainly possible.

A tariff is a tax on consumers which goes directly into US Gov't general revenues.

It seems the prospects of tariffs going away anytime soon are fading.  Eventually the cost of most goods in the copier industry are going to increase because of President Trump.

Duties on Chinese goods started at 12:01 a.m. Friday in Washington, just after midday in China. Another $16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of U.S. goods imports from China in 2017.

https://www.msn.com/en-us/mone...DxQ8?ocid=spartanntp

Whew!  Lets hope the list continues to exclude copy machines.

Are you sure?

84433960 ...........Copying machines

https://assets.documentcloud.o...e-Representative.pdf

SalesServiceGuy posted:

I am glad to hear that you are working in the copier industry so that I know that you have "skin in the game".

There are very many players in the copier/ printer industry each with their own strengths/ weaknesses when faced with a trade war.  Each player will have a different tolerance for how much money they want to loose to maintain market share.  I definitely would not expect a uniform response.

Multi line dealers will have more options to select from than single line dealers and brand loyalties could be forced to change.

I also suspect that used copier sales on equipment already in the USA will increase as the delta between new and used pricing is going to widen.

as of July 6th, there is no tariff on copy machines.  Just copier parts and accessories. 

All very good points. I'm guessing larger players might have more manufacturing site options. However, if their A3 are  manufactured in say US and Korea but their A4 are largely China, there could be discrepency even within a single manufacturers ptoduct line. Another manufacturer could have the reverse.

I am glad to hear that you are working in the copier industry so that I know that you have "skin in the game".

There are very many players in the copier/ printer industry each with their own strengths/ weaknesses when faced with a trade war.  Each player will have a different tolerance for how much money they want to loose to maintain market share.  I definitely would not expect a uniform response.

Multi line dealers will have more options to select from than single line dealers and brand loyalties could be forced to change.

I also suspect that used copier sales on equipment already in the USA will increase as the delta between new and used pricing is going to widen.

Nope...not retired and I do have to live from the commissions I earn from personal sales. I just don't believe that everything has to revolve around what is best for me. That being said, I am under the assumption that all copier manufacturers will be effected pretty much equally so I don't personally expect to be adversely effected.

What about the term "Free Trade" do you not understand?

You argue the advantages of lower lumber prices for Americans while disputing the value of lower dairy prices for Canadians. Free trade suggests that the market should decide what is best for the consumer. Free trade would also suggest that your exorbantly high taxes really shouldn't be a factor.

We should probably leave the health care debate out of the equation. I for one would rather have what we have than what the Canadians have, all things considered. 

I suspect that you are retired from the copier industry and do not have to earn commissions each month to support your family.

As an active sales rep, I do not have the luxury of hoping that things will run their course when I have budgets and quotas to meet each month.

The people who are going to be adversely effected will be US copier sales reps with a higher cost of goods.

"in hopes that these ill conceived trade wars will soon pass."

Considered "ill conceived" by those adversely effected. I'm sure ending slavery was considered "ill conceived" by those adversely effected. Some corrections just have to run their course which may be what you meant by "will soon pass".

Canada charges a 270% tariff because the US has a massive over supply of milk production.  If US dairy product was to enter Canada without tariffs it would destroy our perfectly working dairy industry.  Why should the USA  be allowed to destroy our milk industry so as to partially solve a problem created within the USA?

Besides, how do you think Canada maintains its "free" single payer health care system.  It is by charging high taxes on all consumer purchases.  I do not think that anybody thinks the USA has a good health care system that works well for all citizens.

On the issue of US tariffs on Canadian lumber, it has done nothing but increase the average cost to build a single family dwelling in the USA by $9,000.00 .  High demand for Canadian lumber remains the same.  The $9,000.00 goes directly into US gov't general revenues.  These lumber tariffs do not help a single American.  The lumber tariffs are in effect a new tax on US citizens who want to build anything with lumber.

"Whatever money the Trump Administration gave away to its citizens in its tax cuts of 2017 it is now going to claw back with higher taxes disguised as tariffs."

Pretty much the only way to impact trade is to attack industries previously uneffected by imbalances. For instance, if the Canadians are charging a 270% tarrif on USA Dairy products, you can't resolve the problem using USA dairy. The only option is to offset using a previously non-effected industry, say Canadian Lumber. Obviously, Trump hopes that both tarrifs would come to an end eventually and that trade would become "fair" for both sides.

We hate to see our industry brought into the trade war debate but the bigger picture might suggest that it is for a greater good.

In a hint at what is to soon happen with tariffs on copiers/ printers from China headed to the USA, Harley Davidson Motorcycles announced today that it would shift some production headed for Europe to other global manufacturing facilities to avoid paying tariffs estimated at up to $2,200.00 per bike.  It could take nine to 18 months to make this change.

It also said that it would not increase prices to European dealers and would take a hit to profitability for the remainder of this year at costs estimated to be $30M to $45M.

https://www.cnbc.com/2018/06/2...-eu-tariff-cost.html

I doubt if any copier/ printer manufacturer wants to increase their cost of goods to USA dealers by up to 25% and will make some attempts to absorb these costs or shift production in hopes that these ill conceived trade wars will soon pass.

Do you agree that a new 25% tariff on copier/ printer products imported from China is a consumption tax on US businesses and consumers?

George KRebs posted:

Thank you for sharing the blog, Art. I must admit to not putting two and two together. I appreciate your thoughts.



George Krebs

Shore Business Solutions

George

You are welcome!

SalesServiceGuy posted:

Responding to this question could immediately dissolve into a political debate.

One fact is clear and that is that tariffs are essentially taxes that become Federal Gov't general revenue that can be used anyway the Gov't desires such as fund its massive deficit.

Whatever money the Trump Administration gave away to its citizens in its tax cuts of 2017 it is now going to claw back with higher taxes disguised as tariffs.

"Whatever money the Trump Administration gave away to its citizens in its tax cuts of 2017 it is now going to claw back with higher taxes disguised as tariffs."

When one door closes another door opens.  Many US companies can benefit from the higher tariffs placed on goods from China. In fact I spoke to one of those companies last Thursday.

I disagree that the tax cuts are going to claw their way back with higher taxes disguised as tariffs.  In the end, what Trump wants is fair trade practice for everyone. 

More than a few copier/ printers are manufactured in Thailand and the Philippines due to low labor costs.  I do not know but I think these products tend to be more low end A4 and printer products.  I think most A3 product is made in China.

I can only speak for Toshiba but I know the majority of North American toner is made in North Dakota.

As I am from Canada, I am hoping with fingers crossed that this very likely US tariff war with China will not effect us.

Responding to this question could immediately dissolve into a political debate.

One fact is clear and that is that tariffs are essentially taxes that become Federal Gov't general revenue that can be used anyway the Gov't desires such as fund its massive deficit.

Whatever money the Trump Administration gave away to its citizens in its tax cuts of 2017 it is now going to claw back with higher taxes disguised as tariffs.