As Trade War Deepens, Made in USA Wire & Cable is a Safer Option
The United States and China, as the world’s two largest economies, have spent the past year locked in an intense trade war. Both countries have imposed significant tariffs on each other, creating uncertainty for US businesses that depend on Chinese-made goods. In this climate, many companies are increasingly considering Made in USA products as a more reliable alternative to navigate ongoing and potential future trade challenges.
The impact of this trade war is already being felt: goods imported to the US from China fell by 16% year-on-year in August of 2019. The cause of this decline is a reduction in demand for Chinese products brought on by current tariffs and the anticipation of future tariffs. These changes are making many Chinese-imported products unaffordable, and the wire and cable industry is no exception.
Current Tariffs Mean Chinese Wire and Cable Is No Longer Viable
Businesses that rely on Chinese-imported wire and cable have been heavily impacted by the US-China trade war. In June of 2018, the White House released a statement declaring a 25% tariff on “industrial significant technologies” that went into effect in July of that year. Along with that statement, the US government issued a list of imported items that it would tax under the new tariff. These items include:
- “Insulated (including enameled or anodized) winding wire, of copper”
- “Insulated (including enameled or anodized) winding wire, other than of copper”
- “Insulated ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships”
- “Optical fiber cables made up of individually sheathed fibers”
- “Rope- or cable-making machines”
- “Connectors: coaxial, cylindrical multi contact, rack and panel, printed circuit, ribbon or flat cable, for a voltage not exceeding 1,000 V”
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In the wake of this tariff, buyers of Chinese-imported wire or cable should be aware that a 25% tax is being paid by the American importers of these products, and that this expense is being passed on to them. In some cases, this tariff increase is on top of a legacy tariff, such as 6%, which means the effective cost can be 31% over the manufacturer’s cost.
Data shows that the July 2018 tariff on Chinese tech goods has already begun to affect where American businesses purchase their supplies.
Watch for Chinese Countermeasures
Facing what is effectively a much higher price for their wire and cable products, it is conceivable that some Chinese cable manufacturers might take some shortcuts in manufacturing in order to lower their costs and prices, offsetting some of the tariff hikes. Such shortcuts may include:
- Thinner gauge copper conductors, which would yield poor electrical performance.
- Use of copper covered aluminum conductors instead of the required solid copper conductor. This would not meet US standards for construction or safety.
- Minimal insulation or jacket thickness. You must have enough insulation over the copper covered conductors in order to achieve the proper ratio for 100 Ohm cable designs.
Some overseas manufacturers are also terminating bulk cable to skirt the Harmonized Tariff Code assigned by the Trade Department. This changes a 1000’ bulk cable to patch cord status and allows deviations to the tariff. That still doesn’t change the fact that the cable is not living up to UL or ETL performance listings or ratings.
Tariffs Are Likely to Escalate Further
In August of 2019, the Office of the United States Trade Representative (USTR) made another announcement regarding tariffs: All Chinese imports that had previously carried a tariff of 25% would begin to carry a tariff of 30% as of October 1st, 2019.
If the planned tariff change goes into effect, it will further raise the already high costs of Chinese-imported wire and cable products for American businesses. To avoid paying these increased prices, many companies that depend on these items may start looking for alternative suppliers, such as those offering made in USA wire and cable products, if they haven’t already. However, since the White House has previously adjusted the timelines and amounts of other tariffs, there remains a possibility that this upcoming tariff change may not be implemented as currently scheduled.
Due to the unpredictable state of current US-China trade relations, American business owners find it challenging to make reliable long-term plans that depend on Chinese wire and cable products. For companies seeking high-quality wire and cable at consistent prices, choosing American wires and cables is the most dependable option.
Made in USA Wire and Cable Is a Safer Option
In the first seven months of 2019, the total amount of wire and cable imported by the US decreased. This means that, while some companies are simply importing their wire and cable products from other foreign countries, others are buying more of their wire and cable from U.S. manufacturers.
Buying products that are Made in USA means predictable prices and a steady supply. Many contractors and manufacturers plan and sign contracts months or even years ahead. Unexpected tariffs can raise costs unexpectedly, putting those with fixed payment agreements at a disadvantage. By choosing materials made in the USA, contractors can avoid these risks and ensure greater financial stability.
The US-China trade war doesn’t only affect trade between the US and China; Mexico, India, and Vietnam have all received manufacturing spillover as China’s affordability drops. However, the predictability of pricing from these countries may not be much better. The anticipated instability in these countries caused by the rapid change in manufacturing demand means that the price and production of products, including wire and cable, could fluctuate. This unpredictability would be caused not by tariffs, but by the changing socio-economic and infrastructural demands that this shift in labor will create.
At this point, it’s impossible determine the long-term consequences of the trade war on other countries, but it’s certain that imported goods will be more prone to fluctuation in both price and availability.
For U.S.-based companies, sticking with made in USA wire and cable is the safest option. American wires and cables companies will not face the same tariff and infrastructural challenges that Chinese and other international companies will encounter when manufacturing and selling their products to U.S. businesses.
About Remee Wire & Cable
Remee Wire & Cable is a U.S. wire and cable manufacturer that offers a wide selection of quality products. At Remee, we have a history of expertise and excellence. We sell top-grade cables for automation, multimedia, broadcast, A/V, fire alarm, security, wet locations, and more. We manufacture fiber optic cables and copper multi-pair and coaxial cables. We’re also fully equipped to design and manufacture custom and complex cable configurations. Contact us to discuss your wire and cable needs – we’ll be happy to help!