E-cigarette Tariffs Amid Sino-US Trade Tensions
China's Retaliatory Tariffs
In response to the US move, China quickly responded by imposing a 15% retaliatory tariff on coal and natural gas, and a 10% retaliatory tariff on crude oil, agricultural machinery and some automobiles. It is worth mentioning that according to the Sidley Austin law firm, these US tariffs contain anti - retaliation clauses, which give President Trump the power to increase tariffs by 10% or add new tariff items if China escalates any action.
True Nature and Impact of Tariffs
Many people have misunderstandings about tariffs, thinking that they are taxes imposed on other countries. In fact, tariffs are essentially imposed on American consumers, and will eventually be reflected in consumers having to pay higher product prices. The 2018 - 19 Trump tariffs were “one of the largest tax increases in decades,” according to the Tax Foundation.
Complex Tariff Situation in E - Cigarette Sector
In the e - cigarette space, the tariff situation for Chinese e - cigarette products is now more complicated. The new 10% tariff is on top of the 25% tariff that was already in place during the first Trump administration and continued by the Biden administration (who also added additional tariffs on China). That means e - cigarette users have been paying a 25% surcharge on Chinese e - cigarette products since August 2018, and now face a total tariff of 35%. The two tariffs apply to all Chinese - made e - cigarette devices, including e - cigarette rods, batteries, cartridge - based e - cigarettes, and disposable e - cigarettes, which are classified in HTS 8543.70.9930 and HTS 8543.70.9940 in section 301 of the Harmonized Tariff Schedule.
Limited Impact on Vape Prices
However, due to the new 10% tariff, the price of e - cigarettes may not rise immediately, and its impact on prices is relatively limited, which is constrained by many factors. In 2018, Mi - Pod co - founder Geoff Habicht explained to Vaping360 that the cost of tariffs may be partially borne by manufacturers, importers or wholesalers, depending on the profit margin of a particular product. In addition, Chinese component suppliers may also temporarily reduce prices to help manufacturers maintain profitability.
Uncertain Future Impact
In the current inflationary environment, this additional 10% tax may not be significantly felt by consumers. However, if the trade war between China and the United States continues to escalate, any additional taxes imposed on Chinese products in the future may have a more significant impact on the market and consumers.
