Are the Rumors about Tariffs True?
What’s on the blog? Well, something I ever thought I’d need to talk about when I was getting my college degree: are the tariff rumors true? I mean, I wasn’t a business major. I wasn’t an econ major. My goal was to become a physical therapist. Now I find myself “asking how do the tariffs increase my product price?” Or, more literally, how they increase my wife's and your product prices.
Hang on! I forgot to do the most important thing—introduce myself. It’s me, Jared, and I’m hanging out here on the blog talking about all of the business-y kinds of thing I’ve become pretty good at over the years.
One of those is understanding tariffs and their impact on e-commerce online businesses. Tariffs are a pretty big story in the news right now, so let’s talk get to the bottom of the question of “are rumors about tariffs true?” How do the tariffs increase my product price and how much are the trade tariffs are a few of the topics we will cover.
I admit that for a long time, we haven’t been too keen on watching the news. Heck—we swore off of it a long time ago because we realized that a news story could get us scared about something that was barely a maybe. Not a good business strategy.
Example? Y2K. Remember it? If you don’t, my young buck, let me bring you up to speed. The entire world was going to pretty much end at [11:59] on January 31, 1999, because everyone on this spinning little globe we call home thought programmers hadn’t considered there could be more than one year 77 or 31 or 00. The fallout was going to be massive and doomsday was nigh. Except January 1, 2000 hit and not one dang thing happened.
So yeah, you’ll probably stress a heck of a lot less if you ignore the news and instead just go for the facts. Facts about tariffs, for example.
Here’s what it means in layman’s terms: a tax placed on imported goods by the government to reduce the volume of imports. Why would they do it? To increase reliance on domestic goods and products right here at home. So you can STILL buy the little Chinese doo-dad you’re looking at, but you’ll automatically have to pay more for it because of tariffs.
The reality is, China has kind of had a sweet deal for the last several decades. Lots of decades, in fact. They charge a big, huge tax on American goods coming into their country, reducing the number of American imports. On the flip side, they could send in scads of products with virtually no tariffs.
That’s changing. U.S. President Donald Trump and his administration have pointed out the unfair advantage China has enjoyed and is looking at making Chinese companies pay tariffs of 25% or more to bring their products into the U.S. It’s a move that changes things in a big way.
As a result, some big companies are now moving their sourcing to new countries. Home Depot, for example, has moved $1 billion (yep BILLION) of imported goods out of China and to other countries. That’s gotta hurt!
But before you panic and think that you will never, ever again be able to have a business or grow your business because suddenly products aren’t going to be available for a reasonable rate…
I’ve got some pretty good news—or at least some ideas for you to consider.
Tariff Thought #1
You and your business are not being singled out or changed a bunch more than the rest of the world. You will be charged higher prices—and will probably have to raise your prices accordingly. But people will still buy them. From gas to groceries to trucks and travel, prices go up. It’s a part of life. So don’t start swirling into a pit of despair that you’ll never sell things ever again.
Tariff Thought #2
On a much bigger perspective, you need to know the world is actually moving closer to a truly free trade system (or at least, a cheaper one.) Research is showing that the tariff rate on industrial goods for products coming into the U.S., including machinery, autos, tech products, textiles, leather, consumer goods and more have a tariff rate of about 2%–and a huge segment of products are coming in duty-free. What? I’ll take that for sure!
Tariff Thought #3
China is NOT the only importing option. There are at least 2 dozen other countries actively importing products into the United States with significantly low tariffs. We’re looking at India as an option for pillows, for example. Yes, there will be a learning curve, but you CAN bring products into your businesses from wholesalers and manufacturers at incredible prices. Mexico and Canada are just two of them—and as of this writing, the U.S. is in talks with Japan. There are now, and there will be in the future, other viable options for sourcing products.