enacted tariffs of 25 percent and 10 percent, respectively, on imports of steel and aluminum in late March, temporarily exempting a handful of close trading partners. Since then, there have been several significant updates on the steel and aluminum tariff.
On April 30th, before the midnight deadline on whether to impose tariffs on aluminum and steel from Canada, Mexico and the European Union, the White House announced it would give the allies 30 more days while they continue negotiating a final agreement on trade issues.
The allies have been pushing U.S. officials to make the exemptions permanent — a move the White House has resisted as it continues to seek an updated North American Free Trade Agreement with Mexico and Canada. However, permanent exemptions were given to South Korea, Argentina, Australia and Brazil.
China has retaliated by imposing tariffs on a variety of U.S.-made goods, including HVAC equipment, and filing a complaint with the World Trade Organization. The EU has threatened to do the same if they do not receive a permanent exemption.
The tariff – and the threat of the tariff – have already caused increased prices in the HVAC industry. Many contractors are reporting that they are already receiving price increases from manufacturers and they are expecting that this trend will continue.
So, what can HVAC contractors do to manage the effects of the tariff?
– Reach out to your current customers that are in the market for new HVAC systems and encourage them to act now before prices increase.
– Contact all open leads and inform them of pending price hikes. Use this opportunity to close existing estimates.
– Create a marketing campaign to ensure all clients are aware of the price increase potential so they are not caught off-guard as costs will ultimately be passed down to end users.
– Evaluate the impact these price hikes may have on your pricing and anticipated margins and act accordingly ie. Adjust flat rate pricing
– Make sure to advise commercial clients about potential price increases during the sales, bidding and quoting process.
– Check in regularly with your suppliers and review costs.
– Depending on your inventory model, consider purchasing before prices increase.
FIELDBOSS Contractor Management Software can help you market to your existing customers and leads by segmenting your marketing list, so you can contact the right people and inform them about potential price increases and what the tariffs means for them specifically. Reach out to your clients with targeted offers to turn the challenge of tariffs into a sales opportunity for your company.
Contact FIELDBOSS for more information on how we can help you successfully navigate industry challenges.