We spoke about Trump’s trade war with China and the raising of tariffs to 25% of items from the country in our second episode of Graphic Policy Weekly. Tariffs are a way to “even out” the cost of foreign goods so they’re on par with domestic goods.
While President Trump claims that the foreign government pays the tariff, that’s incorrect. In reality the importer does and that cost is passed along to the consumer in the retail cost of the goods. It’s a tax on consumers.
Much of the comic, game, and toy industry’s production is in foreign countries, especially China, and thus this policy is directly impacting our hobbies.
John Fleskes has spoken out about the impact of the tariff on his company, Flesk Publications. Flesk Publications is a high end art book publisher of which many art books highlight the talents of comic artists. You can read his full post below.
As he points out, this policy also include Hong Kong where his books are printed. He has checked on working conditions, which he describes as “stellar,” and has verified that the paper and materials have been sourced in an environmentally and sustainable way. The facility is “clean” and a “professional environment.” This directly disputes the narrative of “slave labor” producing our goods.
As he describes in his post, this policy decision directly impacts his company making it go from a “good year” to a possible “negative year” and that hiring a new employee won’t happen and bonuses provided to employees won’t happen. Prices up books will also go up while production will be on hold for future books.
Read his full post below while another good read about the reality of book production can be found here.
We have been notified by our shipper today that by the end of June there will be an implementation of the 25% duty tax that will effect books manufactured and imported from China. This includes Hong Kong (where we have our printing done).
At the moment, we have Ballpoint Beauties by Frank Cho, the new Terry Dodson sketchbook, Bombs Away, and the new Art of Gary Gianni for George R.R. Martin’s Seven Kingdoms in transit with an arrival date in the US port at the end of June. If our books arrived a week or two earlier, we would have avoided the duty tax. (Update: This is up in the air at the moment.)
As a small publisher, this is how a sudden duty tax will affect us.
We plan our book releases anywhere form 8-12 months in advance. At that time, we set our cover prices, then promote and advertise the book, as well as list it with our distributor. We sign contracts with the printer so that we can secure a quote, then they order the paper and place us into their production schedule. Unlike just about every other item you find in a store, the cover price is printed on books. So, if a publisher is hit with a sudden tax or unexpected expense, we can not adjust the cover price to compensate. The discounts with the distributor have already been negotiated. I cannot charge the distributors more to compensate. The duty tax comes straight out of our narrow profit margin.
In essence, because of this duty tax, I am preparing for the following. Due to the direct loss to our profits:
1. We will not be able to hire the new employee that we planned in securing this summer.
2. We already signed our printer contract and set the pricing for Spectrum 26. Due to the duty tax, our profits for this book will be greatly reduced. Our 6 months of work on this title will break even, at most.
3. We will not be able to provide the bonuses that we normally provide to our employees.
4. Any funds that we planned on saving for the future are greatly compromised.
5. All of our plans for growth are on standby since we have no idea how this duty tax will be implemented.
6. All books in development are currently being produced, but are on hold as we learn how this will impact us further.
7. All book prices will go up to make up for the duty taxes. How much? We can’t tell yet.
We are going from having a good year, to having a possible negative year due the trade wars.
We need a full year notice if new duty taxes are going to be implemented. That would give us time to plan and make changes. Unfortunately, using printers in the US is not an option. They charge upwards of three times the costs, even after shipping, than China or Hong Kong printers do. Also, the facilities and printers who can print deluxe hardbound books simply do not exist in the US. It would take years for someone to invest in the creation of a premium US art book printer, and it would be a risk since if the duty tax was to be removed in the future it would put them out of business. Creating incentives for US companies to grow manufacturing here, instead of penalizing us for going outside of the US for manufacturing, would make more sense in my opinion. The infrastructure simply does not exist in the US for us to print here. We have no choice but to go overseas.
This will be a tough year for us. We’ll get through it. We’re strong, yet we wish we didn’t have to be.
I’m saddened though. Saddened that I can not take care of my family and employees like I had hoped this year. I’m saddened that much of the slim profits that we make will be taken away from us by a trade war. Publishing is my passion. Making books is my great love. Not even a duty tax will stop us, as much as it may try. But it will be one hell of a speed bump to drive over.