The United States and China are the world’s two largest economies, and, for the past year, they have been locked in a grueling trade war. The US-China trade war has resulted in the imposition of heavy tariffs by both countries against each other. These tariffs, along with likelihood of future escalation, are highly concerning to US businesses that rely on goods manufactured in China. 

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 multicontact, rack and panel, printed circuit, ribbon or flat cable, for a voltage not exceeding 1,000 V”

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:

  1. Thinner gauge copper conductors, which would yield poor electrical performance.
  2. Use of copper covered aluminum conductors instead of the required solid copper conductor.  This would not meet US standards for construction or safety.
  3. 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 that tariff change takes place as planned, it will increase the already high cost of Chinese-imported wire and cable products for American businesses. In order to avoid paying higher prices for wire and cable, many companies that rely on these items will likely seek out other potential cable and wire manufacturers, if they have not done so already. However, the White House has changed the timelines and amounts of other tariffs, so it is possible that this upcoming tariff change won’t be levied as planned. 

Because of the unpredictable nature of current US-China trade relations, it’s impossible for American business owners to make realistic long-term plans that involve the use of Chinese wire and cable products. The best option for companies looking for high-quality wire and cable at stable prices is to buy from the U.S.A.

U.S. -Made 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 American means a predictable price and supply. Many contractors and manufacturers make plans and sign contracts that extend months or even years into the future. Further tariffs could increase contractor expenses, blindsiding those who have agreed to set payments in advance. Contractors can avoid situations like this by sourcing from U.S. manufacturers.

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 U.S.-made wire and cable is the safest option. U.S. wire and cable 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!