For all of those who enjoy Chinese teas: Houston we have a problem! With the latest round of tariffs set to go into effect in June, tea from China will be affected. Up until now, Chinese tea escaped the latest trade disputes; but no longer. What the ultimate cost will be to the consumer will be anybody’s guess. We are monitoring the situation closely, but if it is the full 25%, one would be hard pressed to think that these costs will be not passed directly on to the consumer in some way. We’ll follow up with more information as it becomes available and what tactics and strategies there are to minimize the costs.
We understand some of the background of WHY these tariffs are taking place. One of our employees opened a pizza place in Bejing a few years back but had to close, and another relative ran a factory and had to deal with members of the communist party involved with the company’s handling of certain things. It’s a complex matter, but he hope it is resolved soon.
The problem is when it comes to certain products, there is NO alternative to China. Yes, Vietnam is probably going to get major business in the long term out of this trade spat. But for some industries, you can’t just move and set up shop across the border and start over again. Maybe car part manufacturers will move production to the US, but you’re not going to find any ceramic teapot maker suddenly open up here. Not only would the prices still be way higher WITH the tariffs, good luck finding workers to produce them.
With tea it’s even more complicated. Just like Bordeaux can only come from France, Pu-erh is a China-only tea. There are lots of high-end teas that are produced at multi-generational-owned farms. And most of the world’s cheaper teas are also produced in China. India can take up some of the slack — as I doubt a Lipton drinker will notice the difference — but there really isn’t any alternative in the medium- and high-end market.
Tea prices have been trending up higher recently; part of this is due to increased demand both in China and abroad. Shipping costs have also gone up, and will go up further as the switch to the new cleaner-burning fuel takes place by next year. Also, if Chinese tea is taken out of the equation for certain tea blends, demand will rise for other growers. Either way, the tariffs will make their way through the supply chain.
What can you as a consumer do?
If there are Chinese teas you enjoy and order semi-regularly, make sure you reach out to your supplier and see what sort of contingency plans there will be. For example, savvy companies can calculate their usage and stockpile ahead of the proposed tariffs. Tea that is nitrogen vacuum-sealed can stay fresh for many years. Plus, you can stockpile your own supply based on your usage and use a food saver to seal tea in bags for long-term storage.
Either way, we hope things are resolved, as the major disruption will be to the tea farmers who are now going to be caught up in this dispute.
Photo “Tea Plantation, Sichuan” is copyright under Creative Commons Attribution 2.0 Generic License to the photographer “YOYU.cn” and is being posted unaltered (source)