The main headlines have been around the introduction and then retraction of some tariffs in a short space of time.
“There’s been some, well, there’s been a lot of discussions around fallback [in the chips sector], but it’s been discussion . . . we’re not really necessarily involved in that,” said Slater.
There is still a lot of uncertainty around tariffs, and conversations around tariffs in the news and now they’re real,” he continued, citing tariffs on goods from China, Canada and Mexico. Some have been put into place and sometimes even put in place and then pulled back, so there is still some uncertainty and volatility around tariffs, said Slater.
Slater explained how tariffs can effect international distributors. Importing a component will make it more expensive. An added consideration is that some duties and tariffs will be higher than others depending on the country of origin.
The DigiKey facility is a free trade zone, which defers the tariff, so if the goods are shipped to outside of the US, the tariffs do not apply. If they come from a free trade zone, and are shipped inside the US, there may be be a tariff will be associated with it.
“We’re delaying the tariff on that part until we actually ship it into a tariffed area, or even completely eliminate the tariff when it comes into the free trade zone and ships to an area that is not in a tariffed area. We pay the tariff when [the part] comes in and then we can ship it outside of a tariffed area, for what’s called a duty drawback with the government, where we can draw the tariff money back from the government if it’s outside the free trade zone.
“This is very complicated. Tariffs have definitely added complexity to our business and added complexity to our customers’ business,” admits Slater.
Another complication is to keep the company’s website up to date with changing tariffs, providing information about whether a product has a tariff or not, to understand the true cost. “When a customer comes to look at product, we want to provide them with information . . . that might be if the product has a tariff or if it doesn’t have a tariff, we’d like to inform them on the website so that they can understand what the true total cost is”.
