New Trade Tariffs: 4 Ways to Avoid Paying More
Jan 17, 2019

Tariffs on goods and how to avoid paying moreYou may have heard about the new increased trade tariffs being imposed on Chinese goods, but if you’re like most people, you’ve been waiting to see what materializes before paying attention to all the details.

While things are still in flux, this week will be pivotal in determining whether the current 10% tariff on Chinese goods, which took effect in September 2018, will be raised to 25%. Regardless, we’re already starting to see the effects of the earlier tariffs, which have been placed on billions of dollars worth of imports. So, what does that mean for American business owners and, particularly, for supply chain and procurement execs maintaining their building portfolios? More than you’d think.  

At least 30,000 parts and commonly-used supplies that are imported into the U.S. and found at MRO suppliers, such as Grainger, MSC and HD Supply, will be affected by the tariffs with price increases of approximately 15-30%. 

Surprised? You’re not alone.   

Here are some things to consider and be aware of when it comes to your spending: 

1. Price Volatility: These tariffs will help create constantly changing prices, so how can you keep up when so many items will be affected? If you haven’t already, consider establishing or increasing open communication with your suppliers. China, for example, may be pulling back on tariffs for vehicles from 40% to 20%. Keeping in contact with your suppliers will give you a leg up on how to react accordingly if and when you’re faced with large price fluctuations. 

2. Purchase Power: These tariffs signify that your company may need to be flexible and adjust purchases, so you won’t take a hit. If you’re a large company, you may be covered, but if you’re small to mid-size, you may not have the resources or buying power to dictate prices. One route to consider is joining a purchasing collaborative to collectively gain more leverage for pre-negotiated and potentially time-period-fixed discounts on commonly used items. This can help minimize the sting from tariffs.  

3. Cost of Inventory vs. Cost of Tariffs: One thing to think about is whether it’s worth your while to stock up on certain items now. Weigh the cost of storage against the increased cost of the tariff to see what’s most beneficial for you. You may be able to save some money by purchasing in advance.  

4. Market Changes: While China is the main country affected by tariffs right now, other countries, like Poland and Mexico, may also be affected. In reaction to the tariffs, some manufacturers and suppliers are shifting production to Vietnam and other Southeastern Asian countries to avoid the price hikes. Are your suppliers agile enough to plan for and stay ahead of constant changes? Safeguard your pricing by remaining on the pulse of market changes, and you’ll have more of an advantage should you need to make quick, nimble shifts.    

As our economic landscape changes, we want to help you and your business managers continue to succeed and improve your bottom line. While it seems like many of the tariff changes won’t hit close to home, it’s crucial to consider cost flow, making necessary changes or back-up plans to reduce monetary loss. As tariffs continue to alter the marketplace, staying on top of expected consequences could make all the difference in the success of your business. 

If you’re looking for solutions – perhaps to find new suppliers or manufacturers to help you avoid and off-set tariffs, Qmerit can help!  We offer a managed service that continually provides the optimal mix of suppliers, improves your operational efficiency and gives you visibility into your total MRO spend. With help maintaining these important relationships, you can better manage these volatile tariffs as they constantly change and evolve. We will continue to seek out nimble and agile suppliers so you can concentrate on what you do best. 

Not only that, Qmerit is a managed service that strategically aggregates its clients’ total spend including mid-tail, tail, and rogue for Maintenance, Repair, and Operations (MRO). Our purchasing power will reduce your MRO spend today, preparing you for the tariffs ahead. In addition to ongoing supplier negotiations, we offer account management, compliance, adoption, and a consumer-like eProcurement platform for no-cost price comparisons.  

If you’d like to learn more, please get in touch

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