The Tariff Situation and PCB Sourcing

DSC05355As we write this, the tariff situation seems to be improving. The 25% jump in tariffs planned for January has been postponed 90 days, pending the result of ongoing negotiations with China. That said, there is a 10% tariff on printed circuit boards (PCBs) fabricated in China. Even with the 10% tariff, in many cases, China remains the most competitive option. Should the tariffs jump to 25%, that would no longer be the case. The team at Burton Industries is in the process of qualifying Taiwanese PCB options to ensure our customers have a range of cost competitive options.

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Tariff Mitigation Case Study

 

DSC05352The first round of tariffs have kicked in on components originating in China. Our distribution partners are tracking this and billing the tariffs at the end of the month. We are auditing their charges against our records and are passing along these costs to customers.

We are also working to mitigate tariffs wherever possible. The software tools we have are helpful in identifying country of our origin and alternate sources. We are also identifying suppliers & quoting current custom parts not in China. Here is our most recent cost reduction example:

Tariff Mitigation Case Study

Recently a customer wishing to mitigate China-related tariffs asked us look at alternate suppliers. We were able to identify another Asian source outside of China. The end result was the part cost was reduced from 23 cents to 16 cents, which represented nearly a $35,000 annualized savings in addition to eliminating the tariff cost.