After the 2016 US Presidential Election, some were lamenting the philosophical shift. But, I think there were many like me that
wondered how this would affect their tea purchases as well. In 2018 I predicted here that if Mr. President gets war-stancey, it would significantly affect
the world of puerh. I think this effect
manifested in a more indirect way over the last year in the form of currency
fluctuations. Last week things got real
when a 10% tariff was applied to all goods entering the USA from China. That tariff is applied to all goods (that’s
right tea as well) that enter the USA after Sept 1st.
I wonder if there are any of you out there who are stocking
up before the 10% increase takes hold?
I
wonder why Western puerh vendors aren’t taking advantage of this in their marketing? I also wonder how that is going to affect
vendors like white2tea or Bitterleaf Teas who ship from China? Or Vendors who have wearhouses in other
countries, will they move their stock out before the tariffs hit? I wonder how it will impact Yunnan Sourcing that ships from China but
also has the option of moving its stock to Yunnan Sourcing USA? Or the Essence of Tea that has an option of
moving tea to their Malaysian warehouse?
I wonder about how it would affect smaller projects like Liquid Proust
Teas or Crimson Lotus Tea?
Those comfortably sitting in countries other than the USA
might also be effected if a global slowdown is the result of the trade war or
if their currency decreases in value as a result. Today there is much talk about currency
manipulation and its effect. It’s anyone’s
guess as to how this will end but for now, with the Canadian dollar a bit
higher, I’m considering a purchase…
Peace
6 comments:
I think the best course of action for me is just to wait and see how it all shakes out. I certainly won't be raising prices until I've actually been taxed or will certainly be taxed as a result of the tariffs. Since we send most things through the post from China to our US customers, the de minimis $800 exemption for personal imports (https://www.cbp.gov/newsroom/national-media-release/de-minimis-value-increases-800 )should negate the effect of the tariffs on the end customer in almost all instances.
The real possible casualty from this could be yunnansourcing.us. If it costs 10% more (plus all the other associated labor, rent and shipping costs) because of the tariffs there is no real advantage of having a US site. I'd probably keep it open until most of the pu-erh teas I've stockpiled there are sold off (probably a couple of years atleast).
These tariffs will have NO effect at all on China based retail sellers because of the de minimus allowance. Let's be clear, the only real casualties of these tariffs will be US companies that import tea and to a lesser extent US tea consumers who buy their teas from within the USA.
It's too early to know whether a deal will be reached at the last minute (or in a few months) or how the tariffs will be levied, so we'll all just have to wait and see.
Yunnan Sourcing (Scott),
That is a relief that it won’t be impacting the customer directly.
Thanks for giving us a better understanding of this issue and how it impacts Yunnan Sourcing.
Peace
Personally I think the tariffs on tea are awful, especially considering US history (BTP). It will be more advantageous for people to buy tea direct from China based sellers and receive as a personal import ($800 de minimis expemption). So although we'll not lose any advantage selling from our COM site, our .US site might see increased costs which (eventually) could make it unable to compete with our China-based COM distribution and pricing. In a protracted trade war with possible increasing tariffs this would result in the closure of our US site and fulfillment. Even though we only employ one person part-time it would very sad to have that happen.
Equally we are facing the fall of sterling in the UK that is affecting exchange rates for purchasing either in US dollars or Chinese Yuan. I am dreading to think what will become of us after 31st October 2019, the only consolation is this will be after the Full Moon festival.
At the moment though it gives me plenty of opportunity to sit it out and drink some of my stores but I do fear for the vendors and there are dark clouds hovering over the horizon.
Jonny,
I agree with you that if the tariffs don’t directly effect the customer the exchange rates certainly will. I think this is a big reason the Essence of Tea started trading in USD and distanced them self from the sterling.
I wonder how this will impact Tea Encounter a vendor based in the UK that I have been frequenting this year but probably accepts more purchases in USD?
On the plus side I read that the Canadian Dollar will be one of only a few global currencies to increase against the usd and benefit from a trade war. It is predicted to increase 3.5% in the next 6 mos!
Peace
https://sevencups.com/2019/08/trade-war-tariffs-and-tea/
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