Customer Update on US/China Trade Tariffs (Last Updated: May 20, 2019)
As announced by the Office of the U.S. Trade Representative (USTR) on May 8, 2019, tariffs on List 3 Chinese import products increased from 10% to 25% on May 10, 2019. In response to these changes, Newark will apply the same approach to tariff recovery as we have in the past:
- When Newark is Importer-of-Record (IoR): For List 3 shipments received on or after May 10, Newark will charge the same tariff recovery fee as List 1 and List 2 products, which are currently subject to the USTR 25% tariff rate.
- When Newark Supplier is IoR: Our recovery fees will continue to vary, based on what fees are being passed through to Newark from our suppliers.
While uncertainty around China tariffs and trade negotiations continues, Newark remains committed to minimizing the impact to your business. On a positive note, only ~10% of Newark’s stocked SKUs have been affected by price increases associated with the new tariffs, but this may change slightly as we receive information from suppliers and as trade data becomes more refined.
Our cross-functional response team is working around the clock on a Section 301 mitigation plan to address this complex and fluid situation in a manner that ensures supply chain security and risk mitigation with as minimal impact and business disruption as possible for our customers. This update includes the following information sections:
- List 1 products (USTR-2018-0005) with 25% tariffs, effective July 6, 2018
- List 2 products (USTR-2018-018) with 25% tariffs, effective August 23, 2018.
- List 3 products (USTR-2018-0026) with 25% tariff, effective May 10, 2019.
Newark’s Approach to Tariff Recovery
To comply with Section 301 tariffs, Newark must pay tariffs upfront at importation or pay our suppliers on very short terms. Where we have been charged for tariffs, we are recovering the costs. Tariff decisions made by suppliers are represented in our billing rates, yet we are cognizant of the fact that these changes are apparent in customer purchasing prices.
As this dynamic situation continues to develop, Newark is doing everything possible to minimize the impact of tariffs for our customers while adhering to the law. Various mitigation avenues are being considered and more information will be available once we have evaluated all options.
For more information, see our Customer Update from July 26, 2018.
FAQs
Q: What is Newark’s approach for calculating tariff changes?
A: Newark is billing customers at a percentage that represents the pricing decisions of our suppliers and equitably passes these charges along. We are currently working to minimize the impact of these tariffs wherever possible while adhering to the law.
Q: What parts are impacted by the new tariffs?
A: These are detailed in List 1, List 2, and List 3. Newark does not currently have a complete list of affected part numbers, however, based on our review, only ~10% of stocked SKUs will be subject to the new tariffs.
Q: When will Newark begin/end billing customers for the incremental tariff change?
A: Currently, the tariffs are being factored into Newark’s pricing system. Newark will continue to closely monitor the situation for future updates.
Q: What is Newark’s plan for duty drawbacks and establishing a Foreign/Free Trade Zone?
A: As part of the ongoing Section 301 tariffs process, Newark is monitoring and evaluating these types of options for our customers.
Q: Are part lead times and availability impacted?
A: Lead time and availability have not been impacted by Section 301 tariffs at this time.
Q: How will Newark’s quoting process address China Tariffs?
A: Specific questions about the quoting process can be directed to your Newark sales representative.
Additional Resources
Important Government Information Regarding Section 301 Tariffs:
- Federal Register announcement of tariffs: https://www.gpo.gov/fdsys/pkg/FR-2018-06-20/pdf/2018-13248.pdf
- Press Release: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-representative
- List 1: https://ustr.gov/sites/default/files/enforcement/301Investigations/List 1.pdf
- List 2: https://ustr.gov/sites/default/files/enforcement/301Investigations/List 2.pdf
- List 3: https://ustr.gov/sites/default/files/301/2018-0026 China FRN 7-10-2018_0.pdf
- Tariff Drawback Information: https://www.cbp.gov/trade/programs-administration/entry-summary/drawback
- Exclusion Procedure: https://ustr.gov/sites/default/files/enforcement/301Investigations/FRN exclusion process.pdf
- Customs and Border Protection (CBP) Guidance: https://www.cbp.gov/trade/programs-administration/entry-summary/section-301-trade-remedies-be-assessed-certain-products-china-effective-july-6-2018
- HTS Codes: https://www.usitc.gov/tata/hts/index.htm
Electronic Components Industry Association (ECIA)
- https://www.ecianow.org/whats-new/government-issues-product-list-subject-to-tariffs/
- https://www.ecianow.org/2018/04/ecia-issues-statement-on-trump-administrations-section-301-findings-on-chinas-trade-policies/
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If you have any additional questions, please contact your Newark representative to discuss. Thank you for your continued partnership with Newark.