September 28, 2018
Dear Valued Customer,
On July 6, as mandated by the U.S. Trade Representative under Section 301, a 25% tariff was imposed on a subset of electronic components manufactured in China and imported into the United States. Wall Industries made the decision to delay billing customers for these new tariffs until the details were complete and the impact could be better understood – since July 6, Wall has absorbed all Section 301-related tariffs incurred. On Monday of this week a new mandate was issued imposing a 10% tariff on an additional set of electronic components manufactured in China and imported into the United States which I will address in more detail below.
Suppliers have been working to establish a fair and equitable method to assess the tariffs without disclosing proprietary pricing formulas. Some suppliers have opted to mitigate the effect of the tariff by charging Wall with a separate line item on the invoice based on our current purchase price for materials, not the supplier’s import cost. Those charges have ranged from no current charge up to 25% on our purchase price. Other suppliers have elected to assess the tariff by increasing the Wall purchase price.
WALL INDUSTRIES WILL START BILLING SECTION 301 TARIFFS ON OCTOBER 1, 2018
Starting with shipments made on October 1st, Wall will begin billing Section 301 tariff charges to our customers at variable rates reflecting those of our suppliers. Our approach is one geared towards billing at a percentage that properly represents the decisions of our suppliers and equitably passing these charges along while respecting the fact that our profit margin is included in your price.
On Monday of this week a new mandate was issued imposing a 10% tariff on an additional set of electronic components manufactured in China and imported into the United States. This announcement was made on September 17, 2018 where the tariff rate was set at 10% for affected items, rising to 25% on January 1, 2019. We have yet to receive any formal notification from our suppliers on these newly affected items and therefore will not be passing along charges until we receive those updates.
SECTION 301 TARIFFS FOR CUSTOMERS IN MEXICO AND CANADA
Wall will continue to not charge tariffs on products delivered outside of the United States. Duty payment is ultimately only required for products intended for domestic consumption therefore any duty paid by Wall for product delivered to Mexico or Canada will be processed for duty drawback allowed under Section 301. This is a Wall process and will be invisible to our Mexico and Canada customers. For parts that suppliers have chosen to increase the piece part price we will have no choice but to pass these increases along in the purchase price.
Customer may see billing of tariffs in one of two ways:
- A separate line item for the tariff charge. Either on the invoice for shipment or on a separate invoice following the actual shipment of product.
- An increase in unit cost on a new quote. Wall was opposed to raising prices at the part number level but an exception had to be made for parts which our materials suppliers have chosen to increase their piece part price and not separate the tariff costs, in which case we will have no choice but to pass these increases along in the purchase price.
Our primary objective is to minimize supply chain disruption and to support your requirements at the highest levels. We hope that our decision to delay billing of the Section 301 tariffs gave you more time to prepare for the impacts, and that our billing calculation reflects an equitable approach to this extraordinary situation.
You can find updates on the Wall Industries website under Import Tariff Notice or paste this link in your browser: https://www.wallindustries.com/import-tariff-notice/