Impact of 25 percent tariff removal on Hot and Cold-Water dispensers from China

picture of water dispenser subject to tariff removal
December 18th, 2022 0 Comments

Hot and cold-water dispensers imported from China will no longer be subject to a 25 percent tariff. The U.S. Customs and Border Protection (CBP) has reclassified the dispensers, so they no longer fall under Harmonized Tariff Schedule (HTS) code 8418. This new classification took effect in November 2022. Hot and cold-water dispensers will now be classified under HTS code 8516. The reclassification occurred because neither the heating function nor the refrigeration constituted the primary function of the water dispenser. Therefore, it could not be properly classified under the previous HTS Code 8418 as a cold-water dispenser.

Businesses in the industry are enthusiastic about dispenser reclassification. They hope to take advantage of the lower costs associated with the tariff removal when importing the dispensers. In this article, we will define a tariff and why the 25 percent tariff on certain Chinese goods was imposed. We will also discuss what the reclassification could mean for you if your business is operating in the hot and cold-water dispenser market.

Tariff: What Is It?

An import tariff is a levy on the cost of imported products. The government typically assesses tariffs as a percentage of the product cost. Another approach is to charge a fixed tariff for each unit of imported products, such as $800 per ton of steel and aluminum imports.

The following are the primary justifications for imposing a tariff:

  • Raising prices to restrict imports of products and services.
  • Safeguarding homegrown producers.
  • As a reprisal for partner nations’ unjust trade practices.

There are advantages and disadvantages to import tariffs. Tariffs generate money for the government, so they favor importing nations. Tariffs can also serve as a starting point for negotiations between two nations and a tool for fostering a competitively fair atmosphere for domestic businesses.

However, for domestic customers, tariffs may not be so beneficial because the price of imported goods becomes expensive, thus eroding consumer income.

Why did the US Impose 25 Percent Tariff on Specific Imported Goods from China?

It wasn’t always this way. The United States and China have enjoyed shared growth in their bilateral commerce throughout time. For instance, China’s capacity to import agricultural goods from the United States, especially soybeans, significantly lessened the country’s water and land-use restrictions while also giving United States farmers significant market access advantages. However, at the beginning of 2018, the Trump administration made several claims about China’s trade and trade-related practices including objections to demands that foreign investors form joint ventures, technology transfer, and perceived vulnerabilities in patent laws. The administration then determined that the appropriate course of action was to raise many United States tariffs against China.

The Impact of the Tariff Removal

Cost Savings for Businesses

Cost savings for businesses is the biggest impact of tariff removal.  Without having to pay 25 percent on imports, your business can save hundreds or possibly thousands of dollars per shipment. Accordingly, businesses can reduce prices and become more competitive in the market. Ultimately, the tariff removal will allow you to pour savings back into operations– investing in new equipment or hiring additional staff.  Your business may also be able to use the additional funds as the capital when launching new markets or product lines that may have been previously out of reach because of high import costs.

Increased Demand for Hot and Cold-Water Dispensers

The tariff removal will also increase demand for hot and cold-water dispensers imported from China. With prices dropping due to the previously mentioned cost savings, customers can purchase these products at a more affordable price. This increased demand will hopefully lead to higher sales figures and a larger customer base for businesses across the industry.

Improved Quality Control

Tariff removal on hot and cold- water dispensers should lead to improved quality control for these products. With tariffs no longer acting as a barrier between suppliers and buyers, your business can focus its efforts on ensuring that products meet certain quality standards without worrying about the high costs associated with importing them. This improved quality control will ensure that customers receive only high-quality products when purchasing from you, leading to greater overall customer satisfaction.

Mixed Effects on Manufacturers

The tariff removal has been beneficial for Chinese manufacturers. They can now export their products to the United States with fewer restrictions. This means they can produce more products and make more money. Additionally, manufacturers are now able to keep up with customer demand due to the increased production capabilities afforded by this tariff removal.

On the other hand, American manufacturers have warehouses full of inventory that was subject to the 25 percent tariff increase.  American manufacturers will experience the full cost-saving benefit of the tariff removal once the inventory is sold.

Positive Effects on Distributors

The removal of these tariffs has been beneficial for distributors in the United States. With less expensive imports coming into the country, distributors can now offer customers lower prices without sacrificing quality or profits. Furthermore, with fewer restrictions on imports, distributors can rest assured knowing there is a steady supply of water dispensers available for them to purchase and sell to customers.

Delayed Gratification for Consumers

Like American manufacturers, consumers will experience a delayed benefit from the tariff removal. Consumers will eventually purchase hot and cold -water dispensers at a much lower cost than before. Once manufacturers sell all of the “tariff inventory,” then customers will receive those savings.  Additionally, with increased availability due to increased production and fewer import restrictions, consumers no longer have to worry about finding what they need when shopping for hot and cold-water dispensers.

The Waterways Company is Here to Help You!

The tariff removal on imported Chinese hot and cold-water dispensers is good news for American businesses and consumers. With reduced costs for imports and increased competition in the industry, your company will now have more opportunities for growth and expansion. Additionally, you will also be able to provide better quality products at lower prices for consumers. This decision benefits everyone in the hot and cold-water dispenser market! With that in mind, please contact us for all of your water dispenser and filtration needs!

Business Challenges, Business to Business, Water

Leave a Reply

Your email address will not be published.

Sign up to be on the fast track for expert tips, industry info, product support, and promotions. Leave your name and e-mail below, we promise not to spam you!