China import tariffs hospitalityOn July 11, 2018,  the Trump administration announced a new round of tariffs that will affect a long list of Chinese goods, including textiles.

While much of the news on these tariffs is subject to change, the hospitality industry is already taking into account the massive consequences this will have on the cost of FF&E products. One thing we know for sure? If the proposed import tariffs take effect, any products that arrive in port after September 1, 2018 will be affected, regardless of when the order was placed.

Which Items Will Be Marked Up?

While the effect of the new tariffs on international case goods is a given, even domestic FF&E vendors will see a change in pricing. Though domestic products primarily consist of materials made in America, minor components such as metal pieces and hardware are often sourced from China.

What this means for the hospitality industry is that everything you buy, whether it’s domestic or imported, will likely be affected by the import tariffs. Regarding increased costs, the taxed amount will depend upon the item. Right now, industry experts project an extra tax will be placed on the following products:

  • 20% tax increase on stone goods
  • 10% tax increase on finished goods
  • 4% tax increase on fabrics

Disclaimer: While the information in this blog was up-to-date at the time of publication, the developing news on this topic may affect accuracy.  

Who is Responsible For Paying the Tariffs?

Though many questions surround these new tariffs, concerns around cost continue to rise. With FF&E procurement, it’s not uncommon for purchase agreements to include a section covering taxes and tariffs, so it is likely that many current contracts already have a protocol in place. If you have shipments underway that may not arrive before September, you’ll want to inspect the terms of your existing purchase agreement(s). The cost of the tariffs may indeed fall to you.

For many hotel projects, whether new build or reconstruction, FF&E can be up to one-third of your overall project cost. While there are countless unknowns with the new import tariffs, the success of your property completion hinges on thoughtful preparation along with flexibility. With the right plan in place, you can work to provide these tariffs have minimal impact on your FF&E orders.