Refresh Checked Unchecked Menu Search Shopping bag Geolocation Person Facebook Instagram Twitter YouTube Info Icon CBC Icon CBC Shape CBD Icon CBD Shape CBG Icon CBG Shape THC Icon THC Shape THCV Icon THCV Shape
Advertise on Leafly

Trump’s China Tariffs Leading to Shoddier, Pricier Vape Carts

June 7, 2019
Trump tariffs hit the marijuana industry this month, as talks between the US President and Chinese President Xi Jinping, pictured, drag on.
Trump tariffs hit the marijuana industry this month, as talks between the US President and Chinese ruler Xi Jinping, pictured, drag on.
That vape pen or jar of cannabis flower you hold in your hand might seem far removed from the world of international trade, but both come preloaded with President Trump’s new tariffs on Chinese-made goods.

The new taxes are squeezing cannabis companies, and consumers may feel the hit as well.

Trump’s trade war with China has hit the cannabis industry, which is now dealing with a 25% increase in the costs of the partly assembled consumer goods it imports from China.

$2 Cart Now $2.50

For example, in September 2018, a typical disposable vape cartridge manufactured in Shenzhen, China, cost US companies $2 wholesale. Under the first round of Trump tariffs, that went up to $2.20 per unit. The new 25% tariffs that kicked in on May 1 further increased the wholesale cost of each cartridge to $2.50.

An extra 50 cents may not seem like much, but it has a huge ripple effect.

An extra 50 cents might not seem like much, but “it has a ripple effect,” explained Peter Hackett, CEO of Air Vapor, a US vaporizer hardware distributor.

Let’s say you’re a high-volume vape cartridge importer. Multiply an extra 50 cents per unit by one million units, and you now have a $500,000 hole in your budget.

Hackett compared the tariffs to global warming, where a few degrees difference might not seem like much to a lay person, but it amounts of trillions of dollars in coastal property damage as polar ice melts and sea levels rise. “These tariffs just reverberate up and down the supply chain,” he said.

Related

Time to Admit It: Trump Opposes Cannabis Legalization

Trump’s Tariff Timeline

Trump has pursued a rebalancing of America’s trade relationship with China by ramping up import taxes first on industrial goods like aluminum, then on an expanding range of consumer goods.

First, partly assembled consumers goods, including vaporizer cartridges, glass jars with plastic lids, and preroll tins saw a 10% tariff added to their cost on Sept. 24, 2018. Then on May 1, 2019, after bilateral talks broke down, the Trump administration bumped that up to 25%.

This summer, Trump is threatening to expand the 25% tariff to apply to $300 billion more in consumer goods, including items such as Nike sneakers.

The cannabis industry is already feeling the pain. “It’s already been hit,” said Hackett. “That third round [later this summer] won’t affect us much.”

Related

Is a Tobacco Giant Trying to Take Over the Vape Pen Market?

Small Businesses Hit Hardest

Cannabis consumers aren’t likely to see an immediate jump in the price of Chinese-made products, Hackett said. Instead, he expects cannabis packaging importers and finished-goods manufacturers to attempt to absorb the cost through thinner margins, cost-cutting, or deficit spending.

What it means to consumers: lower-quality products at a higher price.

What that means to consumers: Trump’s China tariffs are leading to lower-quality products that carry a higher cost. That’s a hit that the biggest companies with the deepest pockets can afford to absorb. Smaller operations may have a tougher time of it.

“It really puts the squeeze on these manufacturers and producers, some of whom can take the squeeze while others can’t,” Hackett said.

One Company’s Story

That seems to be the case with Aster Farms, a two-year-old Lake County, CA, company of eight people that grows, manufactures, and distributes cannabis to 35 retail stores.

'We don’t have extra money sitting around to get hit with a 25% tax out of nowhere.'
Julia Jacobson, CEO, Aster Farms

Company president Sam Ludwig sourced especially pretty tins for Aster Farms’ prerolls. “The quality was better than domestic,” he said.

Aster Farms’ tins were already designed, produced, and about to ship when Trump’s tariffs hit. The change led to a two-month hold on the order, with costs going up 25%.

The cost blew a fresh hole in Aster Farms’ budget, already shredded by heavy regulations and taxes, said CEO Julia Jacobson.

“With all the permitting costs and everything that goes into being legal and licensed and getting on shelves in stores, we don’t have that extra money sitting around to get hit with a 25% tax out of nowhere,” she said.

Related

This 2020 Presidential Hopeful Actually Has a Legalization Plan

It’s Not Just Boeing and Apple

Trade wars may sound like the kind of issues that only huge companies like Apple or Boeing have to deal with. “We were so head-down in this,” Jacobson said. “We never expected this to hit in our backyard.”

“It’s a direct casualty of this trade war,” said Hackett. “It kinks the supply chain and ends up squeezing the little guy really, really hard.”

Aster Farms competes with well-funded brands that plan to lose money for years while gaining shelf space.

“Then there are brands like us that don’t want to pass the price on to consumers, but our margins are shrinking and shrinking, and our bottom line does matter,” Jacobson said.

Related

Joe Biden’s Drug War Record Is So Much Worse Than You Think

Trump: Pain Now, Gain Later

Trump has said that fairer trade with China requires some near-term economic pain, but Jacobson disagrees.

“This is not worth it,” she said. “This is not the right way to go about it.”

Trump may talk trade with China’s now-permanent ruler Xi Jinping on the sidelines of the G20 Summit, set for June 28.

Until then, “we just sit, wait, and suffer,” said Hackett.

Related

As of 2019, legal cannabis has created 211,000 full-time jobs in America

David Downs's Bio Image

David Downs

David Downs directs news and lifestyle coverage as the California Bureau Chief for Leafly.com. He's written for WIRED, Rolling Stone and Billboard, and is the former cannabis editor of the San Francisco Chronicle, as well as the author of several cannabis books including 'Marijuana Harvest' by Ed Rosenthal and David Downs. He co-hosts The Hash podcast. TW: @davidrdowns | IG @daviddowns

View David Downs's articles

  • Linda Vee Sado

    Then make the stuff in the US. More jobs and probably a better product

  • 10MMGary

    Wow vape carts might go up in price, well tough shit dipstick, it is China a slave state country which murders 2millions babies yearly and your worried about the price of carts. Douche bag.

  • Highway 69

    Time to switch to vaping flower folks!

  • DennyMD

    The best way to bring down a nation isn’t with bombs but by destroying it’s economy.
    tRump seems to be setting the stage for that very real possibility. Putin is smiling somewhere.
    He’s already stated that if and when the economy tanks that he doesn’t care.
    He won’t be in office and the GOP can just blame the Dems for the mess he creates.

  • Marcus Craven

    The industry should be local and sustainable. It hurts to see people in the industry suffering under this administration. It also hurts to know that some in the American cannabis industry can’t sustain themselves without leaning on China to make their profits. And we can’t make containers here that can compete? Cannabis in all forms and delivery systems should be our domestic controlled industry 100% as 0% is exported out and all the innovation is right here. Disposable pens need to go like dinasours, that’s too much of a waste of resources as is for as little as a 1/4 gram, before tariffs – no sympathy there. Triple the price on them till they go out of style please and thank you.

  • Vernon Jenewein

    It’s an anti Trump left leaning Democrat article. Nothing more. If “WE” don’t reel in our trade deficit with China we are the fools. When I was a kid cheap stuff was made in Japan. Now it is China , Asian countries, some Latin America countries,but China is the one that has been so one sided in trade. When I was a kid a 16oz Coke cost 10 cents. Now it’s $1.69 plus a deposit.The deposit back then was to recover the glass bottle, wash, sterilize it and refill it again and again. If we don’t get a grip on out trade deficits, we, as a country, look to continue to loose billions of dollars in trade deficit to other nations.

  • He should have bought American. Given that China’s Drug War record is worse than America’s.

    Addiction is a symptom of PTSD. Look it up.

  • MrsW Jr

    The U.S. should stop buying from the communist Chinese who treat their citizens like a disposable commodity instead of the humans they are. I’m willing to pay more for products that were not made by the bleeding fingers of a 12 year old…most people I know are willing to part with a few more dollars to know they are not supporting indentured servitude in Asia.