Home Business Tariffs on Chinese Imports Are Threatening the U.S. Vaping Industry

Business

Tariffs on Chinese Imports Are Threatening the U.S. Vaping Industry

As the trade war between the U.S. and China continues, the vaping industry is expecting a major hit, as e-cig manufacturers depend on Chinese imports for over 90% of their products.

Diane Caruana

August 10, 2018

A recent study estimated that a 10% price increase on e-cigarettes would reduce sales by about 12 to 19%.

Earlier this year, Washington had said that it would implement tariffs on $34 billion of Chinese imports. In response to this, Beijing had vowed to retaliate by doing the same thing locally, and implementation of the tariffs on imported goods went into effect at midnight on the 6th of July in both countries.

However, in response to China’s retaliation, President Donald Trump has threatened to increase the scope to $200 billion. As a result of this, U.S. vape manufacturers, who depend on China for 91% of imported vaping products in 2016, have found themselves caught in the midst of a growing trade war.

Viewed as a healthier and cheaper alternative to smoking, a price increase of about 15% could have a detrimental effect on the industry. A study in the journal Tobacco Control estimated that a 10% price increase on e-cigarettes would reduce sales by about 12 to 19%.

The smaller vaping companies fear they’ll go out of business

“Margins on products are already low, to maintain margins we’d have two choices, raise prices or cutting employees’ hours,” said Matthew Milby, who owns two Maryland vape shops under the name Smoke Free Nation. He added that in his opinion these tariffs will drive some shops out of business.

Read Further: Investing.com