I would like to explain a dramatic price increase that will occur over the next few months for many of the bottles we sell. This is not intended to be a partisan post nor a politicization of anything. I only hope to make clear something that I worry is not clear to many of our customers and to consumers in general. This is a post about tax policy and the effects of tariffs. The only reason I’m bringing it up is that the bottles we sell that are made in China just got hit with tariffs.
Tariffs get charged to the importing company when that company retrieves the imported product from the docks or airport where the product arrived. An invoice is provided to the importer with a breakdown of all the customs, duties, fees etc that have to be paid before the product(s) is released from the port. The revenue for the tariffs is treated in exactly the same way as federal tax revenue. Any importer who is paying these fees passes them on to the consumer. By passing that expense on to the consumer, the new tariff is nothing more than a new sales tax.
Since the tariffs are implemented at the federal level, they really are not very far removed from your federal income tax in that they get implemented across the entire country and get spent the same way as income tax revenue. The only difference is that this is a tax tied directly to a consumer’s decision to buy a product but the tax never appears where the consumer could see it. The tax is just buried in the price of the product. Looking at some of the hundreds of products hit with these new tariffs though, this is pretty much a tax on any consumer. Included in the list of finished products is everything from tires to carpet, glass bottles to LED’s. Also getting hit with tariffs are many basic products like chemicals and minerals that go into myriad products, the effect of tariffs being even harder to see for the consumer. I know, the argument is buy American and avoid the tariffs, create American jobs etc. but in many cases, like most of the bottles we sell, there simply is not an American producer.
One more important thing to note with regard to tariffs. A tariff is government regulation. Tariffs are a direct government regulation on what is imported and at what price. Implementation of the tariffs requires vast amounts of time at the government level and at the business owners’ level. There is filing of paperwork, creating, sending, and tracking invoices etc. and every cent of those costs get passed on to the consumer with absolutely no added value to the consumer.
October 13, 2018