The beginning of 2018, the United State Government imposed a broad range of tariffs on goods imported affecting the cost of goods. Many large and small companies have been impacted by this increase which has trickled down to everyday consumers.
What are tariffs and its purpose?
“A tariff is a tax on imports or exports. Money collected under a tariff is called duty or customs duty. Tariffs are used by governments to generate revenue or to protect domestic industries from competition.” (investinganswers.com)
In short, tariffs make international trade of foreign goods more expensive to domestic consumers. International trading allows transaction between different countries to expand their markets and resources that otherwise would not have been available. About every type of goods can be found on the international market: food, clothes, raw minerals, oil, jewelry, wine, stocks, currencies, to water.
As a small business, selling commercial office furniture, we have personally experienced a slight increase in prices from several of our suppliers. Manufacturing commercial furniture in the U.S. is conducted in 48 states driving an economic impact of nearly 725 million dollars annually in imports and exports. For foreign competitors, who source component parts from China, will not feel the effects from tariffs like U.S. manufacturers would. When exporting finished goods to the U.S., their cost basis would be more competitive than domestic U.S. manufacturers. Along with the strong U.S. dollar will put domestic manufacturers in a disadvantageous position in the U.S. market.
In an article by Journal Star, it states furniture stores throughout across the U.S. are seeing 2 and 3 percent price increases. At some point, suppliers will need to pass along the increase to consumers even after their best effort of absorbing the increase.
Resource:
https://www.businessinsider.com/trump-tariff-china-trade-war-products-that-will-get-the-hardest-2018-9
https://investinganswers.com/financial-dictionary/tax-center/tariff-91
https://www.pjstar.com/news/20181215/trump-tariffs-hit-furniture-retailers-consumers