The U.S. government’s tariff policy on Chinese goods is set to officially take effect on April 9, leading to a new round of adjustments in cross-border logistics costs for the e-cigarette industry. 2Firsts has invited L (a pseudonym), a practitioner from an e-cigarette logistics company, for an in-depth discussion on the impact of tariff adjustments on the industry, logistics price fluctuation trends, and corporate response strategies.
Slight Increase in $0.28/kg; Market Response Stable
According to L, following this tariff adjustment, e-cigarette logistics costs have been gradually transmitted through freight rate increases. In L’s company, for example, sea freight rates have risen from 19 RMB/kg (≈ $2.66/kg) to 21 RMB/kg (≈ $2.94/kg), and air freight rates have increased from 55 RMB/kg (≈ $7.70/kg) to 57 RMB/kg (≈ $7.98/kg), with overall increases controlled within 2 RMB/kg (≈ $0.28/kg).
L further explained that the tariff policy directly increased freight costs by 8 RMB/kg (≈ $1.12/kg). However, since it is currently the logistics off-season, first-leg costs have decreased by 6 RMB/kg (≈ $0.84/kg). Therefore, overall cost fluctuations amount to only 2 RMB/kg (≈ $0.28/kg).
“Customers have a high acceptance of freight rate adjustments, and there has been no decline in order volume,” L stated. The e-cigarette industry’s sensitivity to freight rate fluctuations is significantly lower than that of traditional trade. “For e-cigarette products with higher unit prices, a 2 RMB/kg ($0.28/kg) increase is still within the normal fluctuation range.”
Gray Clearance Temporarily Mitigates Impact; Regular Clearance Enterprises Face Significant Pressure
Regarding the tariff transmission mechanism, L pointed out significant differentiation within the industry:
• Gray Clearance Channels: By declaring under borderline categories such as “atomizer accessories,” the actual tariff rate is more than 10% lower than that of regular e-cigarette customs clearance (27.6% base tax rate plus additional rates), making it the preferred route for most e-cigarette companies.
• Regular Clearance Channels: Companies seeking compliance in the U.S. need to pay the full tariff, with logistics costs accounting for up to 80% of the goods’ value, directly impacting market competitiveness.
“Currently, there have been no large-scale back-tax cases in the e-cigarette gray clearance market, but an increase in inspection rates is inevitable in the future,” L emphasized. If U.S. customs strengthen inspections of gray clearance, logistics companies may face substantial back-tax risks, leading to a restructuring of the tax-inclusive pricing model.
Cost Transmission Yet to Peak; Peak Season May See Another Price Surge
Although current freight rate increases are moderate, the industry generally expects further adjustments:
• Secondary Adjustment After Policy Observation Period: Between April 10-14, there may be a second price calibration based on actual tax bills, with some high-tariff categories potentially increasing by 5 RMB/kg.
• Traditional Peak Season Cost Increase: With Amazon Prime Day in May and Christmas stocking season in September, air freight prices may exceed 70 RMB/kg, rising more than 20% from current prices.
• Diminished First-leg Cost Offset Effect: Currently, first-leg air freight prices have decreased by about 30% from their pandemic highs, but as peak season tightens capacity, cost buffer space will shrink.
In response, L’s company has advised clients: “If products are ready, it is recommended to ship them before mid-April to avoid potential policy overlay risks.”
Industry Risks and Long-term Challenges
During the interview, L repeatedly mentioned two potential risks:
• Sustainability of Gray Clearance Model: If the U.S. intensifies crackdowns on illegal imports or if major U.S. tobacco companies pressure the government to regulate the market, existing gray clearance channels will face systemic risks.
• Logistics Companies’ Pressure-bearing Capacity: Under the current tax-inclusive model, logistics providers bear the back-tax risk. If the back-tax amount per shipment exceeds freight income, there may be a risk of abandoning goods, thereby imposing operational pressure on brand owners.
L suggests that e-cigarette companies “need to establish a flexible supply chain system, balancing the ratio of air and sea freight. For best-selling products, insist on air freight to ensure turnover rates; for slow-moving products, switch to sea freight to reduce costs. Additionally, closely monitor U.S. customs code adjustments and plan declaration strategies in advance.”
In the early hours of April 9, White House Press Secretary Karoline Leavitt stated: “The United States will impose a 104% tariff on Chinese goods, effective April 9.”
2Firsts will continue to focus on the topic of tariff increases, providing readers with in-depth analysis and the latest developments. Please stay tuned.
| Logistics Industry Terminology | Definition |
| Gray clearance | An informal cross-border logistics method where products are misdeclared in value or product type to reduce customs duties and avoid scrutiny. |
| Double-clearance duty-paid model | A bundled shipping service where the logistics provider manages both export and import clearance, includes all duties, and assumes risk via a compensation contract. |
| Orphaned shipments | Goods abandoned by logistics firms after customs seizure, often due to high penalties or risk, leaving the cargo without a legal owner. |
| Declared value manipulation | The practice of underreporting a shipment’s monetary value to reduce tax and duty obligations. |
| Compliant exporter | A company that declares products accurately and complies with all FDA and customs regulations. |
| Non-compliant exporter | A company that uses informal or deceptive logistics strategies to minimize costs, often avoiding official duties and regulatory review. |
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