Tariffs on importing products from China

List 4 of Section 301 Tariffs

Return to Tension

As trade relations between the U.S and China seem to be further deteriorating, importers are now at risk of facing a 25 percent tariff on over 3,700 products.

On May 13, the U.S Trade Representative (USTR) published its fourth list of proposed Section 301 tariffs on Chinese products imported into the U.S. The list covers $300 billion worth of Chinese imports. Prior to List 4, the Trump administration had tried to make the tariffs less painful to American shoppers by shielding consumer electronics but that is no longer the case. The newest list proposes a 25% tariff on daily use products like cellphones, televisions, clothing, housewares, pens, and strollers.

List 4 can be viewed here and includes most remaining U.S imports which have not been previously assessed Section 301 tariffs.

Tariffs proposed for products manufactured and imported from China

Tariff summary as of May 16, 2019


Warehousing - Receiving, storing, and shipping your inventory

Warehousing - Receiving, storing, and shipping your inventory

Warehouse, 3PL, distribution center, what’s the difference? Which one do you need?

If you’re planning on shipping a physical product to customers, you’re going to need a location to store your inventory. The type of location you choose will vary depending on the types of customers you need to ship to, but before we get into that, let’s define some of the different terms you may have come across so far:

Warehouse: A warehouse is a building that is used to store commercial merchandise. A warehouse generally acts as a longer-term storage solution and are used by importers, exporters, and wholesalers/distributors. They’re equipped with loading docks so products can be shipped or received by transport trucks. Warehouses can be owned directly by a wholesaler or operated by a Third Party Logistics provider.

Third Party Logistics Facility (3PL): 3PL facilities are outsourced warehousing options used by the majority of Fortune 500 companies. These facilities can receive, hold and transport product, but they never take possession (ownership) of the goods.

Distribution Center (DC): A distribution center is a specialized warehouse used for temporary storage and redistribution of goods. Mass retailers use a network of distribution centers as a storage center for retail locations to pull inventory from.

Warehousing - Receiving, storing, and shipping your inventory
Warehousing - Receiving, storing, and shipping your inventory

Key Warehouse Considerations

So, your product design is nailed down and your supplier is about to begin production but needs to know where it will be shipping the finished product. What’s next?

Shipment Volume

First, you will need to consider the volume of product you will be receiving. If you have a small business and only plan on receiving a few boxes of product at a time, a local storage facility or your parent’s garage might do just fine. If you plan on receiving pallets, containers, or truckloads, you will need to have access to a loading dock in a warehouse. Fortunately for small businesses, in North America, there are large networks of third-party logistics facilities that can receive, store, pack and ship your product for you. With these 3PL providers, you will pay a monthly storage fee (usually per pallet) while incurring variable charges for receiving and shipping your product. Many of these service providers work with all sorts of different small business and can provide a helping hand along the way.

Identifying key customers

The second variable you need to consider is who your customers are. Online sellers who are are shipping directly to consumers can often operate cost-effectively right out of their garages until the volume becomes too much to handle, Small businesses working with mass retailers, on the other hand, are often required to ship product on pallets which means they will need to have access to a shipping door at an owned warehouse or 3PL facility. To make your life easier, it will be important to select a 3PL provider that already has experience working with the retailers you will be shipping to. This can save time while avoiding financial penalties of improperly shipped product.  

In the early stages of your business, it’s important not to overextend yourself while planning for future growth. If you don’t yet need the services provided by a 3PL, there’s no harm in starting small in the space you already have (spare room, garage, ect). As the volume starts to pick up and you find yourself in a time crunch, it might be wise to consider moving your inventory to a 3PL facility or even moving into an office with warehousing space and loading docks while bringing on experienced personnel to manage the logistics side of your business.

Inventory and forklift in shipping container

Choosing a Storage Location

If you’ve decided that working with a 3PL facility is the best option for your business, the next step is determining the best location for your inventory to be stored. This requires a balance between proximity to supply and proximity to demand. Warehousing in the Los Angeles area can be a great option as it’s close to the shipping ports and provides a cost-effective option for receiving inventory from Asia, however, if the majority of your customers are on the East Coast, your FedEx bills will quickly erase any gains in freight savings. For our consumer brands with higher volume, we usually activate a 3PL facility on the East Coast and one on the West Coast. The price to get a container to the east is more expensive but we make up for it very quickly in savings on direct-to-consumer shipments.

Warehouse and product

Understand Your Costs

Every business has different needs and there are many factors to take into consideration when determining how to store and ship your products. Spend the time building out different models to give yourself a full understanding of where your costs will be coming from and where there are opportunities for increased efficiency. While it’s important to choose a solution that allows you to scale, remember not to overburden yourself so much early on that you don’t have the resources to invest in growing your business.


The U.S - China Trade Conflict Timeline

The U.S - China Trade Conflict Timeline

A few months ago, we wrote a piece on what was the escalating trade tensions between China and the United States. The conflict is an ongoing topic of debate so we’ve decided to reformat in order to make sure you have the most up to date information for your business. Because you likely don’t have hours to mull over all of the threats and drama between Xi and Trump, we’ve condensed the timeline into, what we consider to be, the most important developments.

Many import businesses already have teams in place and are optimized for working with China so switching manufacturing to other countries can be a huge headache. While these trade disputes have generated very little good news for importers, fortunately, most of your competitors are experiencing similar issues and the new tariffs likely haven’t given you a competitive disadvantage. We’re optimistic that some face-to-face time at the G20 will help settle some tensions between Trump and Xi but these past few months have served as a great reminder of just how fickle major economic relationships can be. This fragile nature of trade has exposed the dangers of an overly concentrated manufacturing network and has taught us that there is really no such thing as a status quo.

As of this writing, the United States has imposed tariffs on $250 billion worth of Chinese exports. The complete lists of affected goods can be found below:

List 1

List 2

List 3

The Timeline

October 25

Trade talks resumed between the two countries. Trump and Xi are reported to be planning discussions to take place during November’s G20 summit in Argentina.

September 24

The US instated tariffs on List 3, affecting $200b worth of Chinese goods. As of September 24, the total value of goods affected by these new tariffs was $250b.

China responded by instating its proposed tariffs on $60b worth of US goods.

September 17 2018

USTR announced that there would be a 10% tariff on the $200b worth of Chinese exports that will go into effect on from Sept 24- Dec 31. Starting early 2019, the tariff rate on that list was proposed to increase to 25%. Immediately afterwards, China announced that it would impose tariffs on an additional $60b of US goods that would go into effect at the same time.

August 23

The US and China go forward and implement tariffs on $16b worth of goods in List 2.

August 3

In retaliation to the United States’ proposed List 3, China proposed a range of tariffs that would affect $60 billion in US products

August 2

President Trump begins considering a 25 percent tariff on $200 billion worth of goods on List 3 as opposed to the original proposed 10 percent.This list included consumer products, construction materials, tools, agricultural products and commercial electronics equipment.

July 6 2018

As promised, the US and China both move forward with tariffs on the  initial $34 billion in imports (List1). During this time, a second round of tariffs to impact $16b in goods on each side is under review (List 2).

June 18 2018

President Trump threatened a 10% tariff on an additional $200 billion in Chinese products. He also stated that another $200 billion would be imposed if China retaliated further. At this stage, the threats pretty much covered all of the United States annual $505.47 billion in Chinese imports.

May 29 2018

The United States announced that it would be moving ahead with its proposed tariffs on $50 billion of imports while also announcing a plan to limit visas for Chinese citizens in an attempt to protect intellectual property.

May 20 2018

The United States and China appear to reach an agreement after China offered to significantly increase purchases goods of U.S origin.

May 3 2018

The United States and China began engaging in trade talks in Beijing. Here, the U.S demanded a trade gap reduction of US$200 billion within the next two years. No agreement was reached.

April 4 2018

In response to the U.S government’s tariff implementation, the Chinese government announced a list of US origin products that will be subject to an addition 25% tariff which would also come into play on July 6 2018. The list covers $34 billion in Chinese imports from the US and can be viewed (in Mandarin) here.

April 3 2018

The U.S Trade Representative (USTR) announced the first list of products that would be impacted. That list contained 818 product lines comprised mostly of non-consumer products and included industries such as aerospace, technology, robotics, industrial machinery, medical equipment, and automobiles. The complete first list represented $34 billion in products and was set to be in effect as of July 6, 2018.

March 22, 2018

President Trump first announced  that the United States would be imposing a 25% tariff hike that would impact $50 billion in Chinese goods imported into the U.S annually.


U.S - China Tariffs Explained

Trade Tensions

No matter which outlets you subscribe to, your newsfeed is undoubtedly filled with talk of the increasing economic tensions between the United States and China. Given that this is a resource for entrepreneurs and I’m not here to debate who the long-term economic winners and losers or predict the impact on international trade as a whole. The purpose of the post is simply to review what has been said, what has been put in motion and help you identify if there will be any immediate impacts on your business.

President Trump first announced on March 22, 2018, that the United States would be imposing a 25% tariff hike that would impact $50 billion in Chinese goods imported into the U.S annually. On April 3rd the U.S Trade Representative (USTR) announced the first list of products that would be impacted. That list contains 818 product lines comprised mostly of non-consumer products and includes industries such as aerospace, technology, robotics, industrial machinery, medical equipment, and automobiles. The complete first list represents $34 billion in products and will be effective as of July 6, 2018. You can see the full list of product lines here.

The second list covers 284 lines worth $16Billion in annual imports is currently under further review and does not yet have an effective date. The second list can be found here.

Will your product be affected? Visit the links below to find out:

LIST 1

LIST 2

More threats

In response to the U.S government’s tariff implementation, the Chinese government has announced a list of US origin products that will be subject to an addition 25% tariff which will also come into play on July 6 2018. The list covers $34 billion in Chinese imports from the US and can be viewed (in Mandarin) here.

In response (yes, again) to the Chinese government’s tariff implementation, on June 18th President Trump threatened a 10% tariff on an additional $200 billion in Chinese products. He also stated that another $200 billion would be imposed if China retaliates further. These threats pretty much cover all over the United States annual $505.47 billion in Chinese imports. As of this writing, no product lines or official documentation have been released pertaining to these threats.

The trade landscape between China and the United States is changing very quickly so be sure to stay in the loop and monitor how these changes will affect your business.