Beating the New US Tariffs - An Opportunity

For sure, it is the large ticket items that pose a problem.

This is very similar to the new sales tax ruling that has so many people up in arms and sneaky tax software companies feeding that fear. The fact is, an extremely small percentage of online stores are going to be impacted by the economic nexus laws. Most do not do 200 or more per year sales in a single state and even fewer hit the $100,000/year dollar volume threshold to a single state.

The few that are selling tons of cheap products (sourced from China, no doubt) might have one or two states where they hit that 200 sales/year figure but on things that cost $20 or so, the tax bill is not going to be "put me out of business" money.

The even fewer that hit the $100,000/year in dollar volume to a single state are the ones that have the most to fear. That's going to create a whopper of a tax bill in a state or two for them.

I think that if I suspected that I was going to be in either of those situations, I would closely monitor things and just before I hit the volume or dollar value threshold for a state, (probably November or December) I'd shut down sales to that state temporarily until the New Year rolled around and I could reactivate that state. I'd much rather lose a few sales for a month or two in a state than have to report and pay sales tax for all of eternity to that state (and also lose my competitive advantage over the Big Boys).

Again, this is an across-the-board issue that affects all sellers equally. It DOES NOT have a negative competition effect because all of your competitors would be facing the exact same price increases. Unless, of course, you believe that the relatively modest tariffs will suddenly make it possible for American companies to produce the same products for the same incredibly cheap prices that China will have after the tariffs (not likely). The consumer may not like the small price increases, but it will have very little effect on retailers if they are products that people actually want and need.

And, of course, you are assuming that this will drive wholesale prices up. The manufacturer may very well eat the tariff in order to stay competitive. Or, China may manipulate their currency again in order to absorb them.

Oh, and I must add, I don't know where you live but the price of gas isn't even close to "almost double" what it was two years ago. It's up about 32%. If you go back a little further than 2 years, it was at a decade low in February 2016. The price of gas is pretty close to being what the average price for the past decade has been.

That is the traditional view, but it is not always true.

I recently received an email from someone who is using the information in my safe sourcing book to locate suppliers in countries other than China.

He said he had been able to buy a product in another country at half the price he would have had to pay in China, and the quality was excellent.

People continue to have tunnel vision about China, thinking it is always the lowest cost producer of just about everything.

There's a whole big world outside of China. Just because it seems so easy to go online and find a supplier in China does not mean China is the best or cheapest source.

As someone who teaches sourcing and importing, I will admit that in many cases it will take you a bit more effort to locate suppliers in other countries, but with over 20 links in my book to sources other than China, I have done a lot of the hard yards for buyers.

Walter Hay
Importexport