The 25% tariff taking effect at the first of the year will affect custom and large orders here at ABV Packaging.
Please see below for more information on what tariffs are and how they work.
A tariff is a tax or duty imposed upon a specific class of exports or imports. They operate to restrict imports of certain goods and services by increasing the price. By imposing tariffs on imported products, governments hope to balance the number of products imported (which benefits workers and finances in foreign countries), with those made in the USA, benefiting workers and finances in our own country.
How do Tariffs Work?
By increasing the duty on foreign goods and services, the government is able to make some products less competitive against domestic products. For example, in order to discourage the purchase of leather goods from Italy, the U.S. Government may introduce a tariff. The effect of this tariff is that the price of the imported product will go up making locally made alternatives more attractive than those from the foreign country. The driving force behind tariffs on imports is to make imported goods and services less desirable in comparison to USA goods and services. In other words, keeping US citizen’s money in the US rather than giving it to foreign countries.
Benefits of Imposing Product Tariff
The reasoning behind subjecting foreign goods and services to tariffs is to make an effort to protect local industries. Below are a few other reasons why tariffs are implemented by governments.
- They are effective when it comes to the protection of infant industries. They enable developing local industries to take root and flourish.
- They support domestic workers in the USA rather than financing foreign workers.
- Consumer protection – the government will take steps such as levying tariffs on a product that may cause harm to its citizens.
- Tariffs may be set by the government where it feels that a trading partner is operating against the set rules and regulations.
The Effect of the 25% Tariff on Imports from China
The 2019 tariff on Chinese plastics and products will have some consequences on the economies of both countries. Currently, the trade changes have resulted in an increase in air and ocean freight rates, and increased costs of warehousing in the United States.
Due to these changes, we are recommending that any of our clients who anticipate placing large and/or custom orders, should do so now to avoid the tariff in the short term. Please note that our existing in-stock items are not affected by the tariff.