October 26, 2018 – I am sure you are aware that the U.S. Trade Representative and the U.S. Department of Commerce has begun implementing tariffs on imported products from China. These tariffs went in to effect on Sept. 24, 2018. The tariffs have a direct impact on lighting; including lighting fixtures, lighting components and lighting controls. The tariff, known as Section 301 List 3, is designed to impose up to a 25% tax on products listed in the category. The implementation thus far has been at 10% on specific items. (https://ustr.gov/about-us/policy-offices/press-office/pressreleases/2018/september/ustr-finalizes-tariffs-200). We have intentionally delayed announcing any increases until it was truly a necessity.
Through discussions with clients, suppliers, and other industries, we’ve decided that we will not implement a unilateral price increase. We will instead assess a surcharge for the percentage of the government tariff we are required to pay at the point of entry. The surcharge will only be applied to the specific item codes that are identified on the published tariff list. We will leave our product pricing model as it is today, as we do not want to push a price increase through that doesn’t correct, if/when the tariffs are removed or adjusted.
All invoicing will list an additional surcharge line item that will correspond to the current rate of taxation. For items currently taxed at 7.5%, we will add a surcharge of 10% and items taxed at 25% we will add 20%. It is important that our clients understand that we are not profiting from the tariffs and we are participating in the cost absorption to the extent possible.
The Tariffs went into effect on the 24th of September, we will implement our surcharge beginning Nov 10, 2018. We hope that these tariffs will be temporary and when they are removed, we will eliminate the surcharges, and pricing thereafter will reflect our true cost of production as we have done in the past. In the interim, we will continue to update you with any information made available to us.
Jason M. Barbour-C.E.O.