On Wednesday the US announced increased tariffs, up to 50% on a variety of goods from Canada and the lighting industry was impacted. The tariffs are expected to be effective August 20th.

Linda Longo, editor of ElectricalTrends’ sister publication US Lighting Trends, and both a service of Channel Marketing Group, shared details in this article on US Lighting Trends right after it happened:

New Tariffs on Canadian Lighting

On July 20 President Trump announced additional duties up to 50% to offset “Canadian discrimination against the commerce of the United States,” which will take effect 30 days from now on August 20.

In an unanticipated announcement, President Trump issued a proclamation under Section 338 of the Tariff Act of 1930 (19 U.S.C. 1338) (section 338), which dates back to the Great Depression. As such, Section 338 of the Tariff Act of 1930 “empowers the President to, among other things, impose duties on imports of a foreign country to offset the burden or disadvantage from a foreign country’s discrimination against or unequal imposition on the commerce of the United States.”

The administration stated the tariffs are punishment for what it perceives to be Canadian discrimination against three U.S. industries: motor vehicles, dairy and alcohol.

In addition to categories as disparate as wallpaper, paper products, plywood, cosmetic makeup and nailcare products, silver and gold jewelry, smartphones, semiconductor media (but not including LED), Christmas ornaments, golf equipment and ice skates, swimming pools, video game consoles, paintings, curtains, and furniture comes lighting-specific items.

• Product 9405.11.60: Chandeliers and other electric ceiling or wall lighting fixtures, of base metal (other than brass), designed for use solely with LED sources
• Product 9405.11.80: Chandeliers and other electric ceiling or wall lighting fixtures, not of base metal, designed for use solely with LED sources
• Product 9405.42.60: Electric lamps and lighting fixtures nesoi, of base metal (other than brass), not photovoltaic, designed for use solely with LED sources
• Product 9405.42.84: Electric lamps and lighting fixtures nesoi, not of base metal, not photovoltaic, designed for use solely with LED sources
• Product 9405.99.40: Parts of lamps, lighting fixtures, illuminated signs and the like, not of glass, plastics or brass
• The ceiling fan category was absent from the list, presumably because there are no ceiling fans manufactured in Canada.

The tariffs take effect on August 20 on goods that enter the U.S. or are shipped from a warehouse starting on that date.

Following the aforementioned announcement from the White House, the Prime Minister of Canada Mark Carney, released the following statement: “Today, the United States administration announced its intention to impose a new 50% tariff on a significant number of Canadian goods. This is the latest in a series of unilateral U.S. trade actions that began with the U.S. imposing a series of tariffs in direct violation of the Canada-United States-Mexico Agreement (CUSMA), the free trade agreement between Canada, the United States, and Mexico.”  He added, “Recognizing that the U.S. has been transforming all of its trade relationships, including those covered under CUSMA, over the past 18 months, Canada has made a series of detailed and comprehensive proposals to resolve this dispute and to modernize CUSMA. We stand ready to intensify those discussions in the coming weeks.”

What it Means to Electrical / Lighting Distributors

• We’ve learned that a tariff is not a tariff until it is implemented but that you need to be prepared. I say it this was as tariffs have been announced to then be changed or negotiated to a new number. And then there is the “tit for tat” element where Canada may announce their tariffs on a range of products that represent about the same dollar amount but possibly different product categories. So, we’ll see.
• But will pricing from manufacturers change? There are some Canadian lighting manufacturers who export to the US and then some divisions of major companies that operate in Canada. The question will become “what percentage of sales is to the US?” For some of these companies that operate in the “white goods” space, if they institute the tariff, they may become non-competitive and these product categories are easy to switch. For others that are architectural / industrial lines, the question will be “are they speced” and then is it a hard-spec or subject to value-engineering solution. Distributors will give their customers the option. So, if these lighting companies institute the tariff, there is a significant risk. It comes down to confidence in brand and product differentiation. True salesmanship will be need.
• On the residential side, it’s a little different. A number of suppliers in this space used Canada as a warehousing location for their Chinese sourcing to then ship in from Canada, hence bypassing tariffs. This option now has gotten much more expensive. Much of residential sales is a price game. Will there be alternatives for consumers, lighting showrooms, and online retailers?
• If Canada retaliates, US lighting exports to Canada were $1.35 billion. This is all types of lighting and includes lighting sold at retail, online, direct and through distribution. If we go on the assumption that 60% goes through distribution (US distribution is 55% of the total US electrical material market), then lighting through Canadian distribution is $810 million. The Canadian electrical distribution market was about $18 billion (10% of US). According to the recent PathFinder report (Canada’s equivalent of DISC), Canadian electrical distribution lighting sales were about $2.6 billion, so US exports are about 35% of Canadian lighting sales. Would it hurt most of these manufacturers? Probably not given the size of the Canadian lighting market. Most would pass it on.
• If you are a distributor, you know the drill and have processes in place to
  • If you buy from a Canadian lighting manufacturer, and the line is important to you, start talking to your regional manager to understand their plans and, perhaps, share your thoughts of “If they want to retain share, they will need to be price competitive.”
  • Update your pricing
  • Negotiate every project
  • Consider value engineering

The reality … it’s a small part of the US lighting market that, for the most part, shouldn’t impact many people and could be a slight opportunity for some manufacturers.