President Donald Trump has caused an uproar within the vaping community: his administration has decided to raise the tariffs for e-cigarettes and related products imported from China. The estimated surtax will be between 10% and 25%, and will have negative repercussions on the American economy.
With his new plan to raise taxes on Chinese products, the American president could threaten a an entire section of the economy and earn the wrath of countless entrepreneurs. This is a setback for Trump, who managed to seduce vape supporters in 2017 by dismissing Vivek Murthy, a surgeon who opposed vaping as a healthy alternative to smoking.
Recently, Mark Niquette and Matthew Townsend, two economists from the Bloomberg financial group, sounded the alarm. On July 20, they published an analysis about the negative effects of Donald Trump’s new economic policies.
The negative impact of the Chinese surtax
As of today, the vaping industry is booming. The sector has a revenue stream of a billion dollars and supports 600 manufacturers, wholesalers, distributors and retailers around the world. In the USA, Big Tobacco has started to devote part of its straitening to this promising new market.
Most of the vaping economy is based on the dynamism of small local businesses, especially the 10,000 stores selling vaping products. However, the new taxes will surely affect these small retailers’ profit margins. Even a small increase in taxes could increase unemployment and lead to the closing of a large number of small businesses.
The other problem pointed out by the two Bloomberg economists is the influence of the Food and Drug Administration (FDA). This powerful American agency regulates electronic cigarette manufacturing conditions throughout the country. The new regulations are so strict that the construction of an e-cigarette factory on American soil is unlikely. Of course, regardless of the the tax, American distributors and vaping product will have tocontinue to use Asian products in the coming years.