Why You Should Expect Price Increases on Vape Devices.

This might come as a surprise to some - but anyone who's been keeping up with the news knows about the tariffs that President Trump has put on imported products from China - and today (August 23, 2018) the 25% tariff begins on vapor products. 

Currently, the vape industry is continuing to be under scrutiny from the media and Big Pharma supporters with the Flavor Ban the FDA is currently working on which will take away all flavors from tobacco products, including simple menthol. 

As far as the taxes, today is day 1 - and it is imposed on all shipments from China of vape devices, mods, batteries, and other likewise products.

Unfortunately - there isn't a huge market of competing American-made products that go around the tax, as most of the vape devices and brands sold are Chinese such as SMOK, Wismec, Joyetech, iJoy, Suorin, and more. 95% or more of the vape devices currently being used are China made, including the Juul. 

Because of the lack of US manufacturing of devices, the tax will only hurt American Vapers - as there isn't really the ability to "bring the manufacturing back to the US" - the infrastructure isn't really there. Importers and distributors are going to have to raise their prices on the devices - then retail shops (Brick and Mortars) will have to pay more, thus raising the prices - and ultimately the prices will go up to the consumer. Current stock isn't taxed so the effect may take a little bit for you as a consumer to feel; but the stores will start feeling it immediately as they go to purchase more product wholesale to stock in their stores.

“For the vast majority of American vapers, the choice is not going to be an American-made product versus a Chinese-made product with a 25 percent tariff,” says American Vaping Association president Gregory Conley. “It’s only going to be the latter, which isn’t much of a choice at all.”

The tax will effect Brick-And-Mortar vape shops much more quickly, as most small shops have more than one link in the chain of distribution between themselves and the manufacturer. 

"Tariffs are aimed at giving American products a competitive advantage here at home, but if there are no American-made vapor products, everyone loses: customers buy fewer products or wait to buy, retailers struggle, distributors and importers buy less from Chinese companies, and the factories in Shenzhen reduce R&D budgets and lay off workers. No one wins in this war. Except maybe Big Pharma and Big Tobacco." Excerpt from "Tariffs On Chinese Vape Products Begin Today"

Some will say "Why then can't we manufacture vape gear in the U.S.?". Opening a new factory in the US is extremely expensive - the cost of materials and labor are even much higher than in China. Greg Conley stated "The few American vaping manufacturers do not have anywhere near the capabilities necessary to ramp up production to meet American demand.”

“Unfortunately,” he added, “with the FDA deeming regulations less than four years away from shutting down thousands of small businesses, no bank is going to make the eight-figure investment that would be required to even begin to do large-scale manufacturing in America.”

But it’s not only the cost and lack of available parts that prevent American companies from manufacturing domestically. The FDA Deeming Rule prevents any products made after Aug. 8, 2016 from being sold without an FDA marketing order. That requires approval of a multi-million dollar premarket tobacco application (PMTA) for each new product. No independent manufacturer will chance spending those millions, and certainly none would invest the effort and money to make obsolete pre-2016 products in a new American factory. Excerpt from Tariffs On Chinese Vape Products Begin Today

“Small businesses impacted by these tariffs should reach out to the offices of their U.S. Congressman and U.S. Senators and ask them to work towards a solution,” says the AVA’s Greg Conley. Conley testified at hearings held by the U.S. Trade Representative in July, telling the officials, “A rapid rise in the tariffs assessed on vaping products will only result in a tax increase on American businesses and consumers.”

Smoking Vapor's owner Geoff Habicht said “Driving up the price on vapor products only closes the price gap to regular nasty combustible cigarettes and makes it harder for people to stay off cigarettes...It will have negative effects on people’s lives and public health.”

Why does this matter?

It matters because as consumers, retailers, and more - we are all directly effected by this tax. Whether you support Trump or not - there is a 0 sum gain for the vaping industry. It's going to be a loss. Consumers still get sticker shock from a Chinese made device costing $100 - what's funny is the average price of devices just a few years ago was much, much higher.

In 2009 I bought my first Blu e-cig starter kit - for $80. The same style of device you can get for a few bucks today. My first high-end mod was a ProVari - a tube capable of about 10-15 watts - and it cost me over $200. 

One of the top selling USA made devices, the HexOhm, retails for $189-$209; and less people are already purchasing those items. With their new chip set being outsourced in China, I expect that price to go up even higher, too. 

It might be time to start looking back into American Made mech mod companies - because that's about all there will be left without the taxes.

Thanks Obama.

What's The Good News?

The Good news is that as a store that deals in buy/sell/trade - our used devices aren't effected by any tariffs. So rejoice - knowing that buying used may become an even better advantage then before. Adopt a used mod today !

 

Excerpts for this blog were also taken from Tariffs on Chinese Vape Products Begin Today, a blog by Vaping360.

 



Chris Winfrey

Comedian - Vape Extrodinare