U.S. distributors and manufacturers of wax and wax products are bracing for the impact of new tariffs on Chinese imports, which went into effect Sept. 1 after the Trump administration fired its latest shot in the ongoing trade war.
On the eve of a 15 percent tariff being slapped on wax products from China, U.S. suppliers mostly declined to speak openly about the effect the duties will have on the industry. The industry hoped lobbying would stall the tariffs, as in the past, but waxes remained on a list of thousands of products subjected to more than $112 billion in new taxes.
For many years there was no duties on wax, said one industry insider, who spoke on condition that he not be identified. Last year, when the first volley of tariffs were slated to be placed on wax, trade groups complained the U.S. was so reliant on Chinese paraffin wax that any duty increase would be devastating. So wax was taken off the list.
President Donald Trump has hit China with several waves of tariffs in an attempt to cajole Beijing into changing its trade practices and to shrink the U.S. trade deficient with China. China was the U.S.’s largest trading partner, but fell behind Mexico and Canada since the administration started placing duties on Chinese goods last year.
In 2018, the U.S. shipped $2.7 million worth of paraffin wax to China, while the Asian country exported nearly $560 million to the U.S., according to Flexport, a global freight company.
A Midwest wax distributor predicted higher cost for Chinese made wax products is around the corner. Some companies can afford to offset a 10 percent increase, but 15 percent is impossible to absorb, even for large distributors and manufacturers, the distributor said.
“Its not really going to be a pretty picture. Cost can be absorbed at a certain level, but not at 15 percent. The increase will be passed down to customers,” she said.
Industry insiders said the bottom line burn should begin to be felt soon. Eric Linn, a director at freight mover Masterank, predicted within 30 to 45 days the industry will have an idea of the economic impact.
At least one wax products manufacturer isnt overly worried about the increase duties. Candle maker Candlewic has a warehouse full of supplies to fill orders. The Doylestown, Pennsylvania-based company purchases its supplies from North American countries for twin reasons: availability and purity.
“We’re not going to be affected. We buy our wax from the U.S. and Canada so our supply chain is always there,” the executive said, asking for anonymity.
Some in the industry felt Sunday was a hard jab, but Tuesday delivered a right hook when the President announced certain Christmas related products were now exempt tariffs.
“Our leader has decided to put up tariffs on all Chinese products, so there was no escape, and wax was thrown into the pot. As you recall, iPhones and toys were deemed to be sacrosanct and were put off until December so to not ruin Christmas. I guess he figured that wax, like shoes and blue jeans, were not essential to the Christmas trade so we got hit in September,” one person in the industry vented.
Masterank’s Linn predicted the industry will feel some pain during the 2019 Christmas season, but as many companies have already purchased a large portion – if not all – of their holiday wax supplies the pain is minimal. However, he warned, if the duties remain in place around next year, the Grinch will be happy.