WVS NEWS: How Trump’s tariffs could affect the global e-cig industry

And plenty of other countries are equally annoyed about what they consider to be unfair Chinese business practices. As a result, many are contemplating tariffs on certain Chinese products. “[US president Donald] Trump kick-started a trade war, but we all believe there will be exacerbated pressure and friction with other countries as well,” said Wang. “It’s just a matter of time, given the geopolitical situation, before tariffs are put up against Chinese vaping products being imported into other countries.”

Tariffs have already instigated further moves of vaping manufacturing away from China. Previously, companies have said relocations were primarily due to over-competition for resources and personnel in the Shenzhen region rather than any regulatory or geopolitical factors.

That has changed, however, and Wang says tariffs were the number one factor for companies considering relocating manufacturing processes outside of China. This is despite the cost of production increasing for at least the short-term.

Even if companies can find countries with similar labour costs that have comparable levels of manufacturing skills to the experienced Chinese workforce, initial prices will still be raised because the majority of components will still have to be shipped from China. This will also increase uncertainty for manufacturing processes and material planning as well as bringing up overall cost, as even the most reliable shipping methods could face delays or issues not present in a local supply chain and there is no other supply chain in terms of serving vaping manufacturing like the one developed in the Shenzhen area.

“Other countries do not have the scale to maintain this efficiency,” said Wang. “We’re looking to move our whole supply chain to Malaysia. This includes getting some of the companies who worked with us in China to also set up in Malaysia with us while also utilising local Malaysian suppliers. We’re determined to shift the whole supply chain over and make the supply chain management process more efficient by having local suppliers.”

On a positive note, tariffs could lead to innovation. Forcing prices up might spark advances in areas that cut production costs for e-cigarettes. But it could also lead to innovations in other areas such as nicotine pouches, which have already been proliferating at a dramatic pace, according to David Sweanor, adjunct professor and advisory committee chair at the University of Ottawa Centre for Health Law, Policy and Ethics.

Sweanor added that tariffs will also have more immeasurable impacts. For example, they will contribute to a continuing erosion of public trust in authority. This is turn will have its own knock-on effects like seeing more retailers and consumers ignore the legality of vaping products in the US and other jurisdictions.

Wang said they will also add to increasing global uncertainty. “We’re seeing a level of uncertainty from policy-making that is almost unprecedented in history,” he said. “It’s hard to navigate this level of uncertainty.” One thing he does hold certain is that the threat of tariffs for China is not likely to go down any time soon.

As a result, the reliance on China as a manufacturing base will change, and it is unlikely a similar singular bloc will emerge. Relocation to new countries will be dependent on a variety of factors including local regulations, local demand for products and issues like local government support.

“I personally feel the global tariff situation is unlikely to get any better and will likely get worse until a disaster on a global scale happens,” he said. “With many countries eyeing strategic and military competition, the risk of tariffs there can only go higher.”

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