Overseas Customer Advisory
As of 12:01am 5/10/19, the current Administration has levied tariffs on $200 billion worth of products, including headwear imported from China. We as a company strongly oppose the Administration’s levied tariff increase to the headwear category of the Tariff list. As it stands, the tariff has increased the average duties from 7.5% to 32.5%, lessening industry growth.
We support the Administration’s intent to protect U.S. businesses, continue economic growth and bring jobs to the U.S. However, the levied tariff increase will have an opposite effect for our industry. Imposing tariffs of this extent on headwear products does not meet the goals of this Administration to protect National Security, intellectual property rights and repatriate jobs. In our case, the tariffs will destroy many of the American businesses the Administration is trying to help.
Sadly, the infrastructure for the “cut and sew” industry moved overseas decades ago and would take several years to re-establish, if at all. The labor market for the “cut and sew” industry in the U.S. is virtually non-existent, and current labor costs in the U.S. would increase prices well beyond the 25% tariff increase.
There are currently no operations outside of China that could produce the quality of goods at the volume output required for headwear. We have long, effective and mutually beneficial partnerships with trusted and industry-leading headwear manufacturers in China who are committed to socially responsible engagement with their employees and who manufacture headwear products in high quality, safe, modern facilities.
We have no choice, but to increase our costs to you the consumer, effective immediately. Any product you currently have on order with us must be adjusted. How much that may be, there is no immediate answer. We will work diligently over the next few days and weeks to keep the increase to a minimum. However, since much of the first 10% increase was absorbed by us, the new additional 15% (FOB Cost) will be passed along.
We will need most all of you to confirm the new prices for any and all pending overseas orders you currently have in the works with your sales representative here at Capsmith, Inc.
Ultimately, the consumer will bear this increase. Please understand that if the policy changes over the next few days or weeks, we will not change our pricing. Let’s hope businesses such as ourselves and our employees can survive & sustain this situation.