Some companies say they have no choice but to pass increased costs on to customers

Many US importers from China are paying higher tariffs than expected due to ‘stacking’, leading to confusion and making it difficult to forecast just how much they will pay.

Rodgers Wade Manufacturing is a Texas company that make lighting fixtures for major retailers, many of the components sourced from China, which until recently meant the company was paying 70% tariffs on metal fixtures.

“The media was saying it was 30%, but that was never true,” said John Hamer, president, referring to the tariff rate for China announced in May as part of a truce between the Trump administration and Beijing while broader negotiations continue.

The reason is because the 30% tariff was ‘stacked’ atop the already existing tariff on steel products from China that varies depending on the amount of metal used in a fixture, according to Reuters.

When President Trump adds a new tariff, the existing tariffs do not go away, leading to some companies paying more due to tariff stacking, adding another layer of difficulty in manoeuvring through Trump’s on-again, off-again trade war.

Both sides recently agreed to a 55% tariff, but Reuters reports that it’s in part only an estimate of what the average pre-existing tariffs were.

“Hopefully this will bring the [tariff] number down – and some of the clients who’ve been sitting on the sidelines will go ahead and place orders,” Hamer said, “because it’s been all over the map.”

While Rodgers Wade Manufacturing is looking to Mexico and India as alternative suppliers, Hamer said the company has no choice but to pass the increased costs on to its customers.

“The customers pay the tariff,” said Hamer. “When it comes in, we say, ‘Here’s the tariff bill’.”

US businesses are hoping for tariff relief from any number of sources, with Federal courts, including the US Court of International Trade, having ruled that Trump’s imposition of tariffs exceeded his authority. A federal appeals court is considering the administration’s appeal to that ruling, and the tariffs remain in effect while that plays out, a process expected to take months.

While various industries, including recreational boating, are seeking exemptions similar to those used in the first Trump administration, the White House has said it will resist creating such carve-outs.

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