U.S. Tariffs Expected to Raise Vaporizer Prices
President Donald Trump’s proposed tariffs may have an unexpected victim: the vaporizer industry. China is a leader in vaporizer batteries and vaporizers. The Trump Administration is proposing a 25% tariff in the industry, in particular on tech imports.
The tariffs are expected to create turmoil in the industry, with the price increases being passed on to customers.
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Batteries, a key component in vaporizers, primarily come from China, which forces the majority of manufacturers to suffer losses. Estimates suggest that nearly 90% of all vaporizers are produced in China, with India, Germany and Canada having the remaining market share.
Batteries are nearly impossible to find outside of China, forcing manufacturers to purchase the batteries even with the higher price tag.
States have already applied high taxes to vaporizers and the accessories that go along with them. Industry experts fear that imposing an additional 25% tariff on the industry may cause some smaller manufacturers and sellers to close their doors.
The effect could be disastrous with consolidation and the eventual monopolization of the industry thanks to tariffs. Smaller businesses may have to close their doors or sell their business to larger companies that can shoulder the impact of tariffs.
Companies are already preparing for the tariffs by looking to source products from other countries.
The vaporizer industry is one of the fastest growing in the United States, with the industry rising from $3.5 million in sales three years ago to estimates of $5.5 billion in sales in 2018.
Industry professionals claim that the decision to impose tariffs has already negatively impacted their business. The professionals have had to take time out of their operations to come up with plans and alternative sources for products. A sense of urgency has been created in the industry, with companies concerned that the tariffs aren’t the only price increase they’ll face.
China’s goods are cheaper than alternatives. Sourcing products and supplies from other countries will also cause the price of production to go up.
Consumers will eventually have to pay for both of the increases, causing consumers to spend more for the same products or lowering profit margins for many small businesses in the industry.
Higher costs may lead to industry decline and less tax revenue in states. States that already have high taxes may see a lot of smaller businesses go out of business. Vape sellers in those states are at a severe risk of going out of business.
Author: Jacob Maslow
