FAQ about Section 301 - China Tariff

 

Beginning with shipments made on December 1, Symmetry will bill Section 301 tariff charges at a flat rate reflecting those of our suppliers. The affected suppliers are Embedded Antenna Design, Ethertronics, Fujitsu, GigaDevice, Monolithic Power Systems, RunCore, and Telit (GNSS products). The pass-through tariff amount for these suppliers is 20% of our resale price. We will require a Purchase Order revision to add a separate line item for the tariff amount.

Symmetry will continue to delay the billing of Section 301 tariff charges to our customers until December 1st, 2018. Symmetry will pay assessed tariffs due on products imported from China during this period and, in doing so, will shield our customers from incurring or paying tariffs on shipments until the implementation date on December 1st, 2018. This will give our customers more time to prepare, and give all of us, including our suppliers, more time to fully understand the details.

We will require a Purchase Order revision to add a separate line item for the tariff amount. Our approach for billing customers will be to accumulate the tariff over a defined period and provide a standalone invoice for the tariff charges. The exception will be for suppliers that have chosen to increase the piece part price, in which case we will have no choice but to pass these prices increases along in the purchase price. We believe separating the tariff will reduce the supply chain impact and have the least disruptive effect from an accounting and business process perspective.

The date of implementation of the assessing and billing will be on December 1st, 2018.

Symmetry typically has approximately 90-days of estimated usage on hand, so much of our current inventory of Section 301 impacted parts will be imported before the August 23 effective date. We buy this in advance of customer demand and have inventory in stock that was brought in prior to the assessment of the section 301 tariff. There will be instances where Symmetry may not have enough tariff-free parts to cover all customer demand. Symmetry has made the decision to absorb these costs while our systems are being modified to properly assess and collect the tariffs in the future.

In short, Symmetry’s world-class inventory allows us to delay billing for the Section 301 tariffs for the time being.

We do not know if other distributors will postpone, that is a business decision each must make. The industry is dealing with the same challenges relating to identifying affected parts, systems, how to invoice the tariff, and so on. Symmetry’s position is that we will wait until these issues have been resolved before we begin passing the tariff along to the customer.

Our Suppliers have been working to establish a fair and equitable method to assess the tariffs without disclosing proprietary pricing formulas. Most suppliers have opted to mitigate the effect of the tariff by charging Symmetry using a separate line item on the invoice based on our current purchase price, not the suppliers’ import cost. Those charges have ranged from no current charge up to 25% on our purchase price.

The full amount of the tariff paid by Symmetry will be charged to our customer. We will do so in a way that is fair and equitable to our customers. As these charges are pass through, the tariffs will not be considered sales for purposes of any sales programs or incentive calculations, internally or externally.

Symmetry carries a mixture of inventory that includes parts made exclusively in China and parts that come from China that may be made in other jurisdictions. At this time, Symmetry is unable to guarantee that any requests for parts made in places outside of China can be honored. Therefore, we will not be making any specific guarantees related to this type of request. Symmetry will assume that all customers would like to purchase parts from other sources where available and will take steps to alter buying patterns to reflect customer demand.

Shipments to Puerto Rico and other US territories are subject to Section 301 tariffs.

One of the ways Symmetry mitigates the effect of the tariff for exports is duty drawback. However, shipments to US territories do not qualify for drawback. Because Puerto Rico is a US territory and shipments to Puerto Rico are not considered exports, shipments to Puerto Rico or other US territories do not qualify for tariff exemption.

No, the NCNR must be enforced. Symmetry is only administering the tariff that is imposed upon us and is unable to modify this condition of sale.

Symmetry is working with suppliers to review the supply chain on parts being acquired after the effective date of the tariff. In working with suppliers on the inbound side, Symmetry will make buying decisions that provide the best available solution for procuring inventory that reduces the impact of the tariff. This may include strategies such as redirecting inbound inventory and buying from supplier sites in locations other than China. In addition to optimizing the procurement process, Symmetry has developed a process that is meant to be simple and flexible to allow customers ultimate decision-making over how to handle the tariff within their own environment.

Symmetry has not heard from any suppliers that lead times and availability are being impacted due to the tariff situation.

Symmetry will not be implementing any price changes outside of the normal course of business due to tariff related issues unless a supplier choses to add the tariff to the cost of the component.

Symmetry will provide the tariff amount for affected items as a separate line item in the order. Customers will have the opportunity to review the tariff charges for affect items before placing the order.

Symmetry is a member of various industry groups and trade associations that indicate common themes across the issues, similar to those addressed in this FAQ. Symmetry is not unique in needing a) a strong cooperation from suppliers to identify the impact on the affected parts and b) a flexible solution for customers that does not adversely affect the component supply chain.