Classic Components

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25% Mexican Tariffs, How Will it Affect Your EMS Company?

John Pallazola May 31, 2019 12:33:41 PM

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We are a global distributor of electronic components. We stock and source parts from all over the world and ship out directly from Hong Kong, US, and Europe. Many EMS providers and OEMs have been able to avoid paying unnecessary tariffs by utilizing us to strategically source and ship intelligently and with foresight. We procure components from non-tariffed COO and/or ship to areas where the tariffs are not impactful.

The US vs China Tariff war has recently made Mexico a safe harbor for OEMs to move their manufacturing operations. The combination of lower labor costs and no tariffs made it an obvious choice. Two weeks ago the Trump administration reached a deal to lift steel and aluminum tariffs to pave the way for passage of the new USMCA. Today, that whole dynamic was flipped upside down. US stock futures and global stock markets, including shares of Asian and European automakers, tumbled Friday after President Donald Trump said the United States will impose a 5% tariff on all Mexican imports starting on June 10. "The White House indicated the tariff would increase to 10% on July 1 if Mexico does not comply. If the country continues to not act, the White House said, the tariff will increase to 15% on August 1, 20% on September 1 and 25% on October 1. Tariffs will permanently remain at the 25 percent level unless and until Mexico substantially stops the illegal inflow of aliens coming through its territory," the White House said."

With the higher ratcheting tariffs seemingly inevitable, the 25% level appears highly likely. The new tariffs present a huge threat to the enactment of the United States-Mexico-Canada Agreement (USMCA) moving forward.  

What challenges do the new tariffs cause for your company? What solutions do you need from your Supply Chain partners to help you mitigate them? Are there specific components that you need to guarantee that you have an uninterrupted and tariff-free supply on? Click the button below to let us know.

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About Classic Components

Classic Components was established in 1985 and is headquartered in Torrance, California. We have a global footprint with locations throughout North and South America, Europe, and Asia. Classic excels at TMI (Tariff Mitigation Initiatives) and is a top 5 unlimited franchised distributor of electronic components and provides unmatched supply chain solutions and unsurpassed quality.  Classic has set the industry standard through our tireless commitment to customer service, quality conformance and industry-leading counterfeit detection methods.

 

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