By Ed Avis
The Supreme Court decided in February that President Trump overstepped his authority when he enacted tariffs on a wide range of products coming into the United States, and now the government is ramping up a process to refund that money.
You probably paid those tariffs indirectly when you bought equipment, media or other products made overseas. So will you get that money back? It’s unlikely.
This topic came to my attention when past IRgA president John Lipari, president of Plan & Print Systems in Syracuse, NY, emailed me a link to an article by Denise Gustavson in Printing Impressions about applying for tariff refunds (click here to read that article). The article was intriguing, but it noted that only companies that directly paid tariffs could apply for refunds, and that excludes just about every reprographics shop.
John noted that even though repro shops didn’t pay the tariffs directly, they did pay them indirectly through price increases, so it would seem appropriate if that refund money flowed to the shops in some way.
So I sent some emails and made some calls to people who are better connected to the situation than I am. Most of the folks I spoke with didn’t have much to say – it is early in the process, after all – but nobody was particularly encouraging.
One source I spoke with helpfully ran my question up the chain and came back and explained the situation this way:
1) The vendors who paid the tariffs in some cases delayed passing on the tariffs for several months, and once they did increase prices, it was not enough to totally offset the tariffs. In other words, they “ate” some of the tariffs.
2) The vendors may have incurred expenses related to the tariffs – legal and administrative fees, for example – besides the tariffs themselves.
3) Now the vendors may be incurring additional administrative and legal expenses in their effort to get the tariff money back.
Thus, even if they get 100 percent of the tariff money back, they might not break even on the situation, even considering the extra money they collected from buyers in the form of higher prices.
Two other points this source made:
1) The vendors took the risk of importing products despite the tariffs, and now may feel entitled to profit from having taken that risk, assuming there is any additional profit there.
2) The administrative headache and expense of figuring out how much money to return to which buyers, especially given the multi-level distribution structure in the imaging industry, would further impede an effort to return the money.
What Is More Likely to Happen
In my communications with John, he suggested that one way repro shops may see the tariff refunds is through price cuts or promotions. My source on the vendor side agreed that that is much more likely.
For example, rather than refunding tariff-related money to buyers, a vendor may offer a larger promotion on new purchases. This helps the vendor sell more equipment, and cuts the cost for the buyer, so it’s a win-win.
But a promotion on a new purchase doesn’t help a buyer who paid a higher price for something during the tariff time and has no plan to buy something new.
Furthermore, if vendors keep their prices at the new, tariff-inflated levels – and that seems likely – future buyers will be indirectly paying the tariffs even once they’re gone.
Are You Satisfied?
If you bought equipment or supplies at a higher price because of the tariffs, does the explanation above seem reasonable to you?
If you are on the vendor side, are you considering a promotion or price cut to "refund" tariffs? Or is it possible that you will consider issuing actual tariff-related refunds?
Please use the comment box below if you want to share more information or opinions on this situation. If we get a lot of comments, we could schedule a panel discussion via Zoom to dive in deeper.