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What you need to know about tariffs and how to offset them

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Let’s face it, tariffs are confusing and seemingly unpredictable. This article will provide the basics for tariffs as it applies to the LED industry. So, if you’re looking for a place to help you understand tariffs for LEDs and what the timeline looks like, this is the right place.

 

We’ll also cover how you can mitigate the cost of tariffs to your customers by incorporating utility rebates into proposals and giving your sales and marketing teams the information about rebates they need now.

 

What is the deal with tariffs and LEDs (components and fixtures), and how are lighting manufacturers affected?

 

**The key is to pay close attention to the political landscape because the tariff schedule can really change at any time.**

 

As a lighting manufacturer, here’s what you need to know:

 

LED components and fixtures are included in Section 301 Tariff: List 3 with a total import value of $200b.

 

Here’s the timeline for List 3:

 

9/24/2018 - additional 10% tariff

05/10/2019 - tariff increase on List 3 of 25% which lasts until 09/30/2019

10/01/2019 - increase tariff to 30% [POSTPONED to OCTOBER 15, 2019 per an ‘unofficial’ tweet on 09/11/2019) tariff increase to 30% is pending official notice as of the date this article was published)

 

How can lighting manufacturers offset the cost of tariffs?

 

Offsetting the cost of tariffs by using utility rebates makes perfect sense. Here’s why…

 

Most likely, the cost of tariffs will end up being passed through to your customers since manufacturers’ margins are not large enough to absorb the cost. As mentioned above, that could be an additional 30% on the price of your products. This could have a major impact on product sales, as consumers already view expense as one of the primary reasons not to upgrade to LED. Utility rebates could help quell these concerns by reducing the upfront cost of LEDs and hopefully offsetting the cost of tariffs. 

 

Typically utility rebates are promoted by utility programs to encourage the installation of energy-efficient products by making them more affordable than they would be on their own. While this isn’t an ideal situation to promote rebates, it does fit with what they’re intended to do. Tariffs are increasing the cost of LEDs and rebates can help.

 

Whether you’re using rebates to offset tariffs or just to help your customers maximize their savings when upgrading, easier access to utility rebate information can go a long way.

 

Learn more about Encentivizer and how to get access to utility program data and rebates instantly for qualified products.

 

 

We did the research for you, below are the resources we used to put this article together. Remember to check these resources often because of how quickly things can change.

 

Lamps and lighting fittings are located in Section XX, Chapter 94 in the Miscellaneous Manufactured Articles of the Harmonized Tariff Schedule (HTS).

 

You can also search for “LED” in the Harmonized Tariff Schedule site, this link already has the ‘LED’ query parameter included: https://hts.usitc.gov/?query=led

 

Here you will be able to see the Article Descriptions and Rates of Duty for LED components and fixtures.



The entire List 3 can be viewed here by HTS subheading: https://ustr.gov/sites/default/files/enforcement/301Investigations/2018-0026%20China%20FRN%207-10-2018_0.pdf

 

Here’s a list of HTS subheadings and their description:

 

7009.91.1010

Containing LED or fluorescent lighting

7009.91.5010

Containing LED or fluorescent lighting

7009.92.1010

Containing LED or fluorescent lighting

7009.92.5010

Containing LED or fluorescent lighting

8531.20.00

Indicator panels incorporating liquid crystal devices (LCD's) or light emitting diodes (LED)

8539

Electrical filament or discharge lamps, including sealed beam lamp units and ultraviolet or infrared lamps; arc lamps; light-emitting diode (LED) lamps; parts thereof:

8539.50.00

Light-emitting diode (LED) lamps

8541

Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED); mounted piezoelectric crystals; parts thereof:

8541.10.00

Diodes, other than photosensitive or light-emitting diodes (LED)

8541.40

Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light-emitting diodes (LED):

8541.40.2000

Light-emitting diodes (LED)

9033.00.2000

Light-emitting diode (LED) backlights modules, the foregoing which are lighting sources that consist of one or more LEDs and one or more connectors and are mounted on a printed circuit or other similar substrate, and other passive components, whether or not combined with optical components or protective diodes, and used as backlights illumination for liquid crystal displays (LCDs)

9405.40.8200

Light-emitting diode (LED) backlights modules, the foregoing which are lighting sources that consist of one or more LEDs and one or more connectors and are mounted on a printed circuit or other similar substrate, and other passive components, whether or not combined with optical components or protective diodes, and used as backlights illumination for liquid crystal displays (LCDs)

9902.15.59

Plastic grilles (provided for in subheading 8414.90.10), each incorporating a light-emitting diode (LED) light on the exterior perimeter capable of providing continuous light, certified by the importer as designed to be used with exhaust fans for permanent installation and generating 2.83 m3 per minute, such fans of a kind for residential use and described in subheading 8414.51.30

9902.17.47

Electric light emitting diode (LED) lighting fittings, of base metal other than of brass, whether ceiling (hanging) or wall mounted, each with LED light source concealed above a quartz cylinder and designed to create a total internal reflection (provided for in subheading 9405.10.60)

9902.17.48

Electric table or desk light-emitting diode (LED) task lamps, of base metal other than of brass, each with interchangeable mounting options including bases, clamps or other mounts (provided for in subheading 9405.20.60)

9902.17.49

Electric table or desk light-emitting diode (LED) task lamps, of base metal other than of brass, each with ball joints to allow multiple positions of the lamp head relative to the base (provided for in subheading 9405.20.60)

9902.17.50

Electric table or desk light-emitting diode (LED) task lamps, of base metal other than of brass, each incorporating a reflector designed to reflect light from the LED in the stem of the lamp (provided for in subheading 9405.20.60)

9902.17.51

Light emitting diode (LED) motion-activated security lantern kits, of a kind used for exterior lighting, such lanterns of base metal and having antique bronze finish, each with frosted glass, with an integrated photocell and motion sensor, and with a wall mounting bracket (provided for in subheading 9405.40.60)



Other Articles:

 

LEDInside

Increasing Tariffs on LED Product Continues to Impact the Industry 

https://www.ledinside.com/news/2019/8/increasing_tariffs_led_lighting_product_continues_impact_industry

 

Forbes.com

At Long Last, China Bears Draw Blood

https://www.forbes.com/sites/kenrapoza/2019/08/05/at-long-last-china-bears-draw-blood/#5eb4846030ea

 

GZero Media

Graphic Truth: Greatest Hits of the U.S.–China Trade War

https://www.gzeromedia.com/bang-bang-its-trade-war-fridays

 

Please leave comments below to start the discussion! Or email us at hello@encentivenergy.com

 

 

Ashley Garia
Ashley Garia
Director of Marketing, Encentiv Energy

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