The fastener industry responded quickly to Section 301 tariffs of 10% imposed on $200 billion worth of Chinese goods, including fasteners (see list below).

“Section 301 tariffs act as a tax, and effective immediately, the replacement costs of all of BBI’s imports of affected items will have increased by 10%. As a result, we have increased our pricing respectively to absorb the cost increase,” Brighton-Best International stated in a letter to customers dated September 18.

The duty, imposed by President Donald Trump, is the third round of Section 301 tariffs on Chinese goods. Trump has said the tariffs are in response to China’s unfair trade practices.

The additional tariffs take effect September 24, 2018, and initially will be in the amount of 10%.  Starting January 1, 2019, the level of the additional tariffs will increase to 25%.

“These are turbulent times for our industry, however BBI is working to develop a more diversified supply chain to help mitigate this turbulence,” BBI added.

BBI pledged to “diversify” its supply base to mitigate the tariffs, but noted an industry reluctance to build new fastener factories in countries currently unaffected by the duties.

“Factory owners have concerns about new investments into unaffected countries as this will be making a business decision based on a political one. As we know, politics can change much faster than business… Owners have a legitimate worry that once a new factory is operational, the tariffs may have been eliminated.”

BBI president and NFDA board member Jun Xu told GlobalFastenerNews.com that the tariffs is immediately affect importers.

“Because the effective date of the tariffs are 9/24, and this is based on when the product arrives and passes through customs in the USA, effectively all purchase orders placed 3 months ago to today will have the tariffs applied because production lead time is at least 90-120 days.  So the impact is immediate.”

Xu told GlobalFastenerNews.com that different companies have employed various tactics “based on their business strategy and financial situation” to stay ahead of the tariffs.

“This is effectively an extra tax,” Xu stated. “We are not going to speculate for how long these tariffs will last, so we are not going to change our replenishment models.”

What are the longterm effects of Section 301 tariffs on the fastener industry?

“This is the million dollar question,” Xu told GlobalFastenerNews.com. “Frankly, no one knows how long these tariffs will last. Because of this uncertainty, it is also unlikely new factories with new production capacity will come online quickly. Factory owners have a legitimate concern that if they spend the money and time to build a new factory (1+ years), will the tariffs still be in place once the factory is done?

“Politics change faster than business.”

Others in the fastener industry celebrated the tariffs.

“We actually love the tariffs – especially the Asian tariffs,” said one U.S. manufacturer who asked that his company not be identified. “We wish that they had been done sooner, more aggressively, and broader.”

“We do wish that Canada and the U.S. were not in dispute—not a good thing,” said the small screw manufacturer who had complained about steel tariffs. “The tariffs overall have helped us – no question about it.”

One importer said he has not seen either importers or their customers increasing inventory in advance of tariffs.

There is also the question of how much Trump understands about the tariff process.

“China’s now paying us billions of dollars in tariffs and hopefully we’ll be able to work something out,” Trump stated the day the latest round of Section 301 tariffs were implemented.

That’s not how tariffs work, according to Politico reporter Ben White. 

“China doesn’t pay us anything. Importers of the products pay the tariffs and either eat the extra cost or pass it on to consumers.”

On a conference call ahead of the tariff announcement, two senior administration officials could not offer any real explanation for Trump repeatedly saying China would pay the tariffs, White reported.

“Asked if these were some kind of special tariffs that nobody knows about, one of the officials said: ‘The tariffs work the way tariffs normally work.’”

Fasteners are listed among the 6,031 tariff codes that would be taxed if the 25% duties are implemented by the U.S. The tariff appears to apply to nearly all fasteners imported from China.

The Office of the U.S. Trade Representative (USTR) list includes:

7318.11.00 – Iron or steel, coach screws
7318.12.00 – Iron or steel, wood screws (o/than coach screws)
7318.13.00 – Iron or steel, screw hooks and screw rings
7318.14.10 – Iron or steel, self-tapping screws, w/shanks or threads less than 6 mm in diameter
7318.14.50 – Iron or steel, self-tapping screws, w/shanks or threads 6 mm or more in diameter
7318.15.20 – Iron or steel, bolts and bolts & their nuts or washers, imported in the same shipment
7318.15.40 – Iron or steel, machine screws (o/than cap screws), 9.5 mm or more in length and 3.2 mm in diameter
7318.15.50 – Iron or steel, threaded studs
7318.15.60 – Iron or steel, screws and bolts, nesoi, having shanks or threads less than 6 mm in diameter
7318.15.80 – Iron or steel, screws and bolts, nesoi, having shanks or threads 6 mm or more in diameter
7318.19.00 – Iron or steel, threaded articles similar to screws, bolts, nuts, coach screws & screw hooks, nesoi
7318.21.00 – Iron or steel, spring washers and other lock washers
7318.22.00 – Iron or steel, washers (o/than spring washers and other lock washers)
7318.23.00 – Iron or steel, rivets
7318.24.00 – Iron or steel, cotters and cotter pins
7318.29.00 – Iron or steel, nonthreaded articles similar to rivets, cotters, cotter pins, washers and spring washers