Unfortunately, the U.S. vs China Trade War is driving up prices on all goods imported from China. Since many of the parts and components used to make AlumiGlo LED Lights come from China, we are doing as much as we can to keep our prices low.
The Trade War will Affect Everyone
As most of you know by now, President Trump has been trying to negotiate a better trade deal with China for the past 3 years. The U.S. trade deficit with China in 2018 was 419 Billion dollars and thus far, Chinese leaders have refused to allow more U.S. goods to be sold in their country. This isn’t a new problem and to be honest, should have been addressed many years ago and was not.
Since President Trump has been unsuccessful in negotiating a better trade deal with China he added an additional tariff (tax) on products being imported to the U.S. from China. In response, China retaliated and increased tariffs on many U.S. products and commodities being exported to China. A standoff between the two countries continues with tariff’s increasing to an additional 30% on top of the normal 5% to 10% charged for most products imported to the U.S. from China. This means the cost of ALL products being imported from China is or will soon be costing 36% or more than they did a few months ago.
How Will This Affect Pricing?
A 36% to 40% tariff on all products imported from China has to be absorbed somewhere. Most manufacturers do not have a high enough profit margins built in to their products which would allow them to simply absorb that kind of a cost increase . Wal-Mart, Amazon and other big box stores have forced smaller companies to reduce profit margins to a bare minimum in order to compete with them. If the manufacturers cannot absorb the price increase they have no choice but to pass along part of the increase to the retail stores they supply. Since most retail stores work on narrow margins as well, they will have no choice but to increase the retail price of items they are selling.
In order to combat a large price increase on AlumiGlo lighting products, we have decided to sell less to dealers and sell more product direct from our website. Typically, a manufacturer sells to a wholesaler and the wholesaler sells to the retail store. If we sell our products direct to the consumer via our website, retail prices will not have to increase as much. We will also be eliminating products that cost us more to make and do not sell as well. If the lights are no longer affordable to the average person, we will no longer make them.
In Our Opinion
The 30% plus tariff increase is going to affect us all. In the end, we will all end up paying billons of dollars in tariffs for goods made in China that should have been made in the U.S.A. all along. Sam Walton founded Wal-Mart on the “Made in America” principal but soon after his death, Wal-Mart quickly started manufacturing in China and other countries to make more money. In order to compete, more U.S. companies migrated to China and Mexico which devastated manufacturing jobs in America. This problem should have been addressed many years ago and never was. Now we will all have to pay the price for being so greedy. We will do everything we can to keep prices as low as possible and appreciate your patronage and support over the years.