The Tariff Problem

From the Desk of Brian Tauber, CEO

The U.S.-China trade war is impacting us all. With the imposition of a 25% tariff on $200 billion worth of products imported from China, many of us are confronted with an increase in our cost of goods. For plastic components, our customers confront tariffs that apply to almost all products in the cosmetics, beauty care and consumer goods industries.  For manufacturers like CPP Global, the tariffs increase the cost of decorating and assembly equipment manufactured in and imported from China.  In short, none of us are escaping the consequences of this international trade dispute.

When the U.S. government instituted the first round of 10% tariffs, I, like many others, felt that the issues would be resolved fairly quickly. Unfortunately, they were not.  In fact, recent negotiations failed, resulting in the increase in those tariffs from 10% to 25%. While I still feel that these measures are temporary, I am no longer confident in the time frame for resolution. In the meantime, we are all absorbing significant increases in the costs of components and equipment from China.

Agility is critical to our customers. Reduced lead-times and the ability to react to dynamic markets has driven strategic change in the industry, with many companies pursuing regionalization, ensuring that suppliers are located as close to filling and distribution points as possible.  A focus on sustainability is also driving some organizations to reduce their carbon footprint by shortening the length of supply chains, be it to serve U.S. or other markets.

The recent tariffs, while likely temporary, only reinforce the need to develop trusted relationships with suppliers in multiple global locations. The general uncertainty of international geopolitics creates risk, providing yet another reason to take a strategic view to global supply. Minimizing risk while increasing agility and reducing environmental impact necessitate longer-term strategic discussions to achieve these goals.

At CPP Global, we recognize and share these objectives.  Working with our customers, we focus on total value based on trusted relationships from both our U.S. and China facilities.  Able to provide world-class quality and continuous improvement through our commitment to a comprehensive Lean Culture, we offer solutions that meet our customers’ needs in the U.S. and abroad. Bringing compact production to the U.S. and increasing the capabilities of our China facility are just two examples of what CPP Global is doing to support its customers all over the world.  We are engaged with customers in strategic discussions about the steps needed over the next several years to increase agility, minimize risk and improve sustainability, and we stand ready to work with you to ensure your success as well. Please feel free to contact me directly at btauber@cppglobal.com or your CPP relationship contact to discuss how we can better serve you.