How U.S. China Tariffs Are Impacting IT Purchasing

OEM hardware prices are still on the rise due to the new U.S. China tariffs that went into effect this year. As technology departments and budgets feel the strain, it’s important to keep track of IT hardware affected by U.S. China tariffs and what your options are to alleviate the CAPEX strain.

Many of the major networking manufacturers have already raised prices. Cisco and Juniper have responded with a 5-10% rise in prices even on products that are not yet affected under the new tariffs.

The Effect on Hardware

There is a comprehensive list of imports impacted (PDF), but IT managers and purchasers should primarily focus on the hardware’s Country of Origin (COO). The SKUs affected by U.S. China tariffs likely to have an increased price, but that is only if the hardware’s COO is China. Some of these SKUs have a different COO (though many major manufacturing plants the OEMs, like Cisco, Dell EMC, and Juniper, rely on are in China), and those parts would not see a change.
Overall, it doesn’t matter where the product or part ships from. The COO impacts it whether its coming from London or Beijing. Customs tracks the COO for everything imported and exported, and the applied tariffs are determined from that.

Understanding Harmonized Codes for IT Hardware Affected by U.S. China Tariffs

The Harmonized System is internationally standardized to classify all globally traded products. Individual countries agree to and are responsible for assigning a duty structure to each harmonized code category. The recent duties imposed on goods of Chinese origin affect over 6,000 of the HS codes that classify products being imported into the US.

Due to the size of the list and the range of possible classifications per product, it’s difficult to tell which specific SKUs the new tariffs will impact. Currently, there is a good deal of misinformation about what products are currently affected and which ones are not yet. Additionally, some OEMs, like Cisco, have already raised their prices across the board, even for hardware that has not yet been included on the new tariff list.

Lastly, it is important to know that it doesn’t matter where the product or part ships from. Regardless of where the shipment originates, if the COO of the product is China and its classification is on the list, duties will be assessed.

Don’t Pay Inflated Prices for Parts Outside of the Tariff

While OEMs are inflating their prices across the board, you need a hardware partner you can rely on to keep track of the parts affected by the tariffs, not one that will pass the cost burden on to you whether the part is under the new tariff. Function5 is an independent distributor of Voice & Data Networking Equipment. We are that partner.

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