WVS NEWS: Temporary US-China tariff relief benefits vaping sector
Some firms have already switched supply sources
For those still reliant on Chinese imports or those that have moved supply chains to alternative countries but are still reliant on some components or materials coming from China, the pause will obviously come as some relief. This could include companies such as Ispire, which is in the process of moving vaping product manufacturing to Malaysia but is still reliant on existing Chinese supply for the time being.
For those that have made alternative arrangements, such as moving to supply sources based away from China or attempting to set up domestic US manufacturing, the 90-day pause is unlikely to be enough to spur another change of course. But it does leave them in a vulnerable position. This is likely true of several companies in the cannabinoid space that have already discussed moving manufacturing to the US or sourcing cannabis-specific products, such as pre-rolled paper cones for joints, from companies in countries such as India.
Pessimism about the longer term
Generally, the mood about the current tariff level holding seems pessimistic – with most expecting further changes and potential increases in the near future. This would likely lead to these companies continuing with current plans, regardless of the new reduction in overall cost of imports from China.
The pessimism appears to stem in part from the reason for the pause, which is meant to enable ongoing talks between the US and China on some further type of permanent accord. This currently includes establishing a “mechanism to continue discussions about economic and trade relations”.
President Trump said in the executive order outlining the pause that the ability to do so came on the back of recent discussions between the two governments in Geneva on the role they play not only in the domestic economy but also the global economy.
Both sides emphasised the importance of a sustainable and mutually beneficial trade relationship and acknowledged the potential for continued dialogue to address their respective concerns. However, some third-party skepticism about coming to a long-term agreement remains.
– Freddie Dawson ECigIntelligence senior contributing editor
