In 2018, the China-United States trade dispute resulted in a long list of tariffs on goods traded between each country. These import tariffs affect many industries, and hospitality is no exception.
After months of talks, a 10% tax on Chinese imports went into effect in late September.
The duties were initially set to rise to 25% effective January 1, 2019. However, the US-China trade war recently came to a truce agreement, delaying the increase by 90 days.
The 25% tariff increase may take place as soon as March 1, 2019, pending any additional changes.
FF&E Status Report on the New Tariffs
Many pieces of furniture, fixtures, and equipment are manufactured in China, resulting in a price surge for hoteliers and suppliers alike.
As a result, some manufacturers are working to move production facilities from China to neighboring countries such as Vietnam. With a high demand for facility relocation across various industries, it has become increasingly difficult and expensive for FF&E manufacturers to secure a factory in other countries.
Disclaimer: Just as possible changes on the Chinese tariffs are still up in the air, there are many unknowns about how the industry will solve for this issue. While the information in this blog was up-to-date at the time of publication, the developing news on this topic may affect accuracy.
How to Manage Costs
Right now, the best solution to avoid extra costs caused by the import tariffs is to purchase products from a domestic vendor that is not affected by the US-China trade war.
By sourcing FF&E items domestically, not only will you circumvent the tariff fees, but you will likely see a decrease in lead times, as well. While several domestic vendors are hiking up their price points to remain competitive, they often are still a lower-cost alternative to paying the tariffs.
If you cannot find a suitable domestic FF&E vendor, it is essential to be as timely as possible when placing purchase orders to China to avoid the increased rates occurring in 2019.
As long as you place the purchase order early enough, you can receive your items before the tariff increase takes effect. Even if you aren’t ready for the installation process to take place, receiving and storing product in advance will drastically cut down on costs associated with the FF&E import tariffs.
Discover Saving Opportunities with Innvision Hospitality
Are you concerned about the effect the tariffs on Chinese imports will have on your project budget? At Innvision Hospitality, we utilize strong vendor relationships, both domestic and international, to procure FF&E for our clients at the best possible price.
Contact us today to find procurement options that work for both your timeline and your bottom line.