According to Reuters, the US Trade Representative Office announced on August 7 that it has imposed a 25% tariff on Chinese products worth about US$16 billion, which will be officially implemented from August 23. Vape products are also subject to tariffs. However, this is not a good thing for American e-cigarette practitioners and consumers!
Reuters recently published an article saying that the US e-cigarette industry may become a victim and fall into the dilemma of price increases or layoffs.
According to estimates by the US e-cigar industry, the addition of tariffs will result in a 15% increase in e-cigarette prices. The report said that e-cigarette consumers are very sensitive to price increases, and the industry may suffer a certain fall. According to a report released by the American research institute Nielsen, the retail sales of the US e-cigarette market in 2018 is about $5.5 billion.
“Product profits are not high. We can only have two options to guarantee profits: price increases or layoffs,” Matthew Millby, who owns two e-cigarette stores in Maryland, estimates that some stores will be forced to close.
Juul Labs and VMR Products are the two most affected companies. Nielsen’s report released in June showed that Juul’s market share was as high as 68% in the second quarter of this year, which make it a leader in the industry. In response to the U.S. Department of Commerce’s proposed tariffs, Juul’s chief legal officer, Gerard Masood, commented that other countries besides China would not be willing or able to provide the products their company needed.
Industry experts predict that the United States will impose tariffs on almost all vape products, and the hardest hit will be the small business. VMR CEO Jean Valer is very worried about this. And he said he has to raise prices by 10% to 15% and pass the cost on American consumers.
About 91% of the US imports of e-cigarettes and related parts are from China. Reuters pointed out that in the short term, it is difficult for the United States to refuse China’s independent production of e-cigarette products. This is because the regulatory environment for related products in the United States has not yet been formed, and food and drug regulatory requirements are still not perfect. In addition, the United States lacks the expertise to manufacture e-cigarette products.