FIBCs and Tariffs

You have likely heard about the trade war and tariffs on American imports to other countries as well as foreign exports to the United States. If you require FIBCs for your business, you may naturally be concerned about the impact of tariffs on the bulk bag industry. Here’s what you need to know.

What Is the Trade War?

Here, the term “trade war” refers to the United States’ economic relationship with China. In response to a variety of factors, including the perceived threat of the growing economic dominance of China and concerns over how friendly the Chinese government is to the U.S., the United States has imposed tariffs on a variety of Chinese goods coming into the United States.

The idea of these tariffs is to make these goods more expensive so that American wholesalers will be more likely to buy less expensive domestic products. Consumers would then buy less expensive products made with American components, which are not subject to tariffs.

How Does the Trade War Affect You?

That depends. If your business relies on products produced in China, or components imported from China, you can expect the prices of those products to go up. Typically, if a manufacturer needs tariff-laden components to make their goods, they pass the additional cost to the consumer.

The United States Trade Representative (“USTR”) has implemented “List 4” — a final round of tariffs that apply to all goods that come in from China. FIBCs are named on the list, which means FIBCs imported into the U.S. from China are now earmarked for the 15% tariff.

As of September 1st, President Trump announced that a 15% tariff would go into effect on the 300 billion of remaining products (List 4). FIBCs (6305.32.0010) are on list 4, so FIBCs exported from China to the U.S. will be subject to a 15% tariff.

Important Note! The tariff is in addition to the current duty. Despite some confusion, it’s confirmed with numerous experts that it’s the duty + the tariff. So if the tariff goes into effect, it will be 8.4% (duty) + the 15% (tariff) for a total of 23.4%.

Tariff List 4 (15%, September 1) on 300 Billion of Additional Products

Because of the 15% tariffs imposed on FIBCs from China on September 1st, at some point thereafter, USTR will establish a separate product exclusion process which would provide an opportunity to request an exclusion. The fact that there are numerous sources of FIBCs other than China does present a considerable challenge for obtaining an exclusion. Additional information on the exclusion process will be provided as soon as it’s available.

The tariffs on the previously listed products (250 billion) are not impacted today and remain at 25%. There was a mention of increasing these to 30%, but we have not seen anything official on that yet.

King & Spalding Tariff Summary & Links to Lists 1-3

Note: These tariffs only impact listed products exported from China to the United States.

Midwestern Bag & Supply Is Prepared for the Trade War

If you get your bulk bags from Midwestern Bag & Supply, know that we’ve done everything we could in light of the sudden changes in tariffs. We prepared for this shift ahead of time by adapting our global business away from China and toward countries which are less likely to be subjected to tariffs by the U.S. government.

Our goal is to keep our bags as affordable as possible. To do this, we are making a concerted effort to stay on top of the geopolitical trade situation and letting it inform our approach to the partners we select.

Contact Midwestern Bag & Supply for Affordable Bulk Bags Today

At Midwestern Bag & Supply, you’ll continue to enjoy delivery of the same dependable and reliable woven polypropylene FIBC bulk bags at reasonable prices that you always have. As always, excellence is our standard and perfection is our goal. To learn more about bulk bag options or to order bulk bags, contact Midwestern Bag & Supply now.

*Last updated: 9/30/19