American vapers and the industry that provides their vaping gear are being squeezed on multiple fronts. In addition to the daily news stories featuring politicians demonizing JUUL, and impending FDA restrictions on e-liquid flavors, now the Trump administration is imposing tariffs on Chinese vapor products.
The first round of tariffs on vapor products takes effect today, imposing a 25 percent tax on all shipments from China of e-cigarettes, mods, batteries, and similar devices.
Tariffs are import taxes added to products from another country, intended to create an economic benefit for competing American-made products. But, since there is no substantial production of vapor products in the United States, the tax will simply punish American importers, wholesalers, retail sellers, and ultimately vapers themselves.
“For the vast majority of American vapers, the choice is not going to be an American-made product versus a Chinese-made product with a 25 percent tariff,” says American Vaping Association president Gregory Conley. “It’s only going to be the latter, which isn’t much of a choice at all.”
The tariffs will be assessed on finished products (not individual parts) being shipped from China beginning today. That doesn’t necessarily mean prices will increase immediately. But the smaller the business, the less likely it will probably be to attempt to absorb losses from the taxes for very long.
Geoff Habicht, president and co-founder of Smoking Vapor – manufacturer of the mini vape Mi-Pod and several other brands — says the effects will vary by product. “On products where the margins are lower (which is almost all hardware), we need to pass the entire increase along and it has a higher impact — because our cost to manufacture and the consumer retail price are already tight, so the retail increase will be close to 15-20 percent. On products with better manufacturing margin, the 25 percent tariff may only have a 8-10 percent increase at retail.” Habicht says that possible price concessions from parts suppliers, and a favorable exchange rate might help keep costs down too. Of course, the exchange rate could also work to raise costs.
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