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Tariffs, the SMB Market, and the Cost of Used Hardware

Posted by Integrity Global on Nov 9th 2018

Tariffs, the SMB Market, and the Cost of Used Hardware

Tariffs, the SMB Market, and the Cost of Used Hardware

Anyone tuning into the news over the past few months will have likely heard about the US’s imposition of tariffs on Chinese goods. In fact, even someone who goes out of their way to avoid keeping up with the news has probably heard about the looming trade war. But for all of the news coverage out there, many consumers -- and particularly SMBs -- are still unsure of how these tariffs will actually impact the price of everyday goods.

As of October 1st a 10% tariff on $200 billion of Chinese goods across a wide range of industries. With this amount expected to increase to 25% by the end of the year, business owners are concerned about how this might affect their bottom line.

Below, we’ll take a look at what sorts of imports are being impacted by the tariffs. We’ll also offer some tips on how to avoid paying higher prices for the goods that your business needs in order to grow and thrive. Keep reading to learn more.

Are Prices Going to Rise?

The unfortunate truth is increased consumer goods prices are inevitable, given the sheer size and sale of the trade war that’s unfolding between the US and China.

If you currently purchase and use equipment from common hardware manufacturers like Dell, Cisco, HP, Intel, Microsoft, Unisys, and other companies which source the majority of their components from China, you can expect to see an increase in your overall costs as the prices of various goods increase over the coming months.

What Goods are Affected?

Companies like Cisco, HP, Microsoft, and Intel manufacture a huge range of hardware for businesses large and small. But what sort of products will be impacted most by the tariffs that the US is levying on Chinese imports?

Although this list isn’t exhaustive by any means, some of the goods likely to be impacted by the US’ tariffs on Chinese goods include:

●Power supplies

●Processors

●System boards

●Various internal parts such as controllers, video cards, and graphic cards

●Nickel-metal hydride (NiMH) batteries

The Office of the United States Trade Representative has published a complete list of goods impacted by the tariffs, and it’s available here.

Impact on Resellers

If your business routinely purchases hardware from companies like Microsoft, HP, Dell, Cisco, Intel, or Unisys, you can expect to see an increase in the cost of various goods. But particularly if you’re a reseller of these types of goods, you’ll need to begin checking the Country of Origin (COO) of the hardware you purchase.

Keeping up with the COO of hardware will be especially important for resellers due to the potential costs associated with the new tariffs. The margins on hardware resale are typically quite slim. As the prices of these goods go up due to the tariffs, resellers may find that their margins are so small that these goods are no longer profitable. Or, they may need to increase their prices in order to account for the costs associated with the tariffs.

Of course, most resellers are well aware of this and have been attempting to stock up on goods in advance of the 25% tariffs. As a result, the rise in demand for shipping has resulted in a significant increase in international shipping prices.

What About Used Goods?

With tariffs currently at 10% and set to increase to 25% by January 1st, small businesses are rightly concerned about price increases on hardware. Fortunately, though, there are ways to avoid paying these higher prices.

Used and refurbished hardware is an excellent choice for SMBs in need of high quality hardware at an affordable price. While the cost of used hardware will likely increase somewhat as demand for it grows, you can still expect to pay considerably less for refurbished Cisco hardware or used parts and equipment from Dell than if you were to shop for these items new.

When selecting used and refurbished hardware, be sure to choose a reputable company that utilizes a thorough quality control process. Here at Integrity Global Solutions, we pride ourselves on offering the best in refurbished hardware to our customers. All of the hardware we sell goes through a detailed inspection process to ensure that it arrives in at your door in optimal condition. Need a quote or have questions? Contact us today, or use our chat feature to speak with a representative now.