Tariffs are here for the glass industry as the U.S. scales up its trade war with China, but will they increase?

Tariffs has hit the glass industry as the U.S. scales up it’s impending trade war with China. In the latest proposed tax, float glass is slated to be on the chopping block. As a part of a 200 page list, many types of glass are tagged for an extra 10% duty when entering the U.S.

The import of float glass is heavily hit, with all thicknesses to be taxed at the new rate. Bent, laminated, and tempered glass for use in architectural applications were also included for architectural use or otherwise.

As of September 17th, the Trump administration has decided to move forward with tariffs on Chinese goods. The tariffs will hit nearly $200 billion of U.S. imports from China, with architectural glass being one of them.

Recently, the Wall Street Journal reported that some goods, including many items necessary in the glass industry and the construction industry at large, will be taxed at 25% instead of the previously mentioned 10%. However, it has been confirmed that the tariffs will be 10% and not the full 25%.

President Donald Trump has threatened to enact the tariffs since his inauguration to combat what has been called manipulation. On Monday, the 20th, President Trump reiterated remarks that he previously made in 2017 by saying, “I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also.” (Source: Bloomberg)

The effect, and enactment of these tariffs is uncertain, but that uncertainty has to drive glass industry professionals to safeguard against the possibility of drastically increased pricing on imported glass. We put together a guide on imported glass and how the whole process works, and you can download it for free by clicking the link below.

Download the FREE Glass Import Guide

Enactment of further tariffs is on hold for the moment as both Presidents Trump and Xi Jinping look towards a meeting in Argentina on November the 30th. If talks fall through, it is likely that more tariffs will be immediately enforced, including the possibility of the previously mentioned 25% tariff becoming the enacted amount.

The 10% tariff is not as bad as it appears on the surface, however. In March, the exchange rate between the Dollar and Chinese Renminbi was 1 to 6.25. The dollar has strengthened in this time period, increasing to 1 to 6.85, a 9.6% increase. Because of this strengthening, the “real” impact of the 10% tariff is only a 0.4% increase in cost. While the 10% increase is bearable, an increase to a 25% tariff represents a much larger increase in overall cost.

While the future is uncertain, tariffs do represent a rise in cost for the glass industry. As supply in North America is outpaced by demand, China has represented the premier import location to fill the gap. As the domestic glass shortage continues, and Chinese glass (which makes up 22% of the glass market) becomes more expensive, the glass industry will have to get more creative in how they find and use float glass sourcing.

Without China, there would not be enough architectural glass to go around. Those that have set out to remedy this, such as Xinyi in Canada, have seen their efforts fail with local officials.

Barrett’s VP of Worldwide Sourcing, Matt Hale had this to say about the tariffs: “Our advice? We’re not going to make a knee-jerk reaction, and we don’t think the industry should either. With boots on the ground we’re keeping dialed in to the situation with real time info to make the best decisions for their business.”

We’re staying calm. If the 25% tariffs do come into play, there are various routes that could be taken. Domestic glass could become the cheaper option, but supply could represent a larger issue than cost. However, China is not the only country with production capabilities. We’ve made sure to vet and diversify our manufacturer portfolio to guard against unforeseen circumstances such as tariffs.

The one sure way to maintaining worldwide supply is to work with a global exporter like our team at Barrett Limited. We’ve put together a U.S. based team that has employees across the globe to manage logistics, vet factories, and handle all the issues that make international glass so difficult to buy. To learn more about how you can start diversifying your glass supply, drop us a line and let us know how we can grow your business together.

We’re going to keep updating this page as more info on tariffs becomes available. Subscribe to our newsletter to receive updates directly in your inbox.

Last updated, 9/27/18

Created by JPM Digital Marketing

 

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