This Week in Imaging: How Will China’s New Tariff Affect Office-Imaging Industry?

by Kathleen Wirth · May 24, 2019

Last week, we discussed the United States’ latest imposition of tariffs on Chinese-made goods imported into the United States. This week we take a look China’s hiking of its tariffs on U.S. goods to 25 percent, which it says will go into effect on June 1st.

While the lion’s share of these goods are agricultural products, also included are U.S.-made laser printers, inkjet printers, digital copiers, and fax machines, as well as parts and accessories for this equipment.

In the office-imaging industry world, three companies that may be affected by China’s tariffs are Canon Inc., HP Inc., and Xerox.

Xerox

Xerox’s manufacturing facilities are located around the world. The company’s largest manufacturing site is in Webster, New York, where it produce fusers, photoreceptors, Xerox iGen and Nuvera production-printing systems, components, consumables and other products. Xerox’s EA Toner plant is also located in Webster. Its other primary manufacturing operations are located in: Dundalk, Ireland, for its high-end production products and consumables, and in Wilsonville, Oregon, for its solid-ink products, consumable supplies, and components for its mid-range and entry-level products.

Xerox of course also sources products from Fuji Xerox, its joint venture with Fujifilm. Some Fuji Xerox products and parts are made in Japan. However Fuji Xerox Shangai in China manufactures low to mid-range MFPs and supplies, while Fuji Xerox Shenzhen in China manufactures laser printers, MFPs, and supplies. Fuji Xerox also has manufacturing facilities in Thailand, Vietnam.

As can be seen Xerox products are vulnerable to tariffs imposed by both the United States and China.

HP Inc.

For its part, HP Inc. makes some of its desktop PCs in the United States, but fully assembled PCs aren’t on China’s tariff list, although some PC parts and components are.

HP’s printers are primarily made in China, and also in Malaysia and The Netherlands. So, while HP China-made printers are subject to U.S. tariffs, on the other hand, neither HP PCs or printers would be subject to China’s tariff. HP may also be able to somewhat re-distribute its manufacturing.

Canon Inc.

For its part, since 1985, Canon’s Canon Virginia subsidiary has been manufacturing toner supplies for use in copiers and printers. These made-in-the-USA products would be subject to China’s tariff.

Our Take

While the Trump administration’s motive in starting a tariff war with China was to retailiate against China’s alleged IP theft, as well as to “correct” the United States’ trade imbalance with China, the “best made plans of mice and men often go awry.” This is particularly true for electronics in today’s global economy, as manufacturers typically have manufacturing facilities all over the world, and parts of products are assembled in different countries.

One unintended consequence of the tariff war has been that some manufacturers, such as Ricoh and some PC component makers, are moving production out of China and into other Southeast Asian countries such as Thailand. Others, such as PC maker Lenovo, have manufacturing facilities all over the world, including in the United States, and can shift production as needed to avoid tariffs. Aside from Ricoh, most in the office-imaging industry appear to be taking a wait-and-see approach to tariffs – while also objecting to them – but that’s likely to change, so stay tuned. And, of course, there’s always the possibility that the United States and China will negotiate a deal that eliminates tariffs on both sides.

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