Tariffs, those taxes levied on imported or exported goods, have returned to the center of the international trade debate.
Amid geopolitical tensions, economic fluctuations and shifting political decisions, tariffs impact not only governments, but also the industries, businesses and consumers that depend on global trade to operate efficiently.
Recently, Argus Media reported on growing uncertainty surrounding possible import tariffs on lubricants in the U.S., which generated concern in dependent markets such as Puerto Rico and the Caribbean.
Although it has been confirmed that these tariffs have been removed for derivative products such as lubricants, this remains a major issue for sectors such as agriculture, construction, telecommunications, manufacturing, healthcare and government, as future changes in trade policy could again impact their operations.
At American Petroleum, with over 40 years of experience serving these industries, we understand how vital it is to anticipate the impact of these measures.
What is a tariff and how does it affect imports and exports?
A tariff is a tax that a country imposes on imported goods (when they enter the country) or exported goods (when they leave the country). These levies can have different purposes: to protect local industry, to generate revenue for the government, or to respond to trade measures by other countries.
- Import tariff: applied to products arriving from abroad. For example, if a 10% tariff is imposed on imported lubricating oil, this percentage is added to the final cost of the product.
- Export tariff: less common, but also used. For example, if the U.S. decides to tax the export of certain lubricants, it would increase the cost to buyer countries in the Caribbean.
In sectors such as energy and automotive, where margins of error are minimal and logistics costs are high, any fluctuation in prices due to changes in tariffs can have a ripple effect throughout the supply chain.
How tariffs impact the lubricant industry
The lubricants industry is highly dependent on international trade. Many raw materials, additives and finished products are imported, while others are exported to nearby territories such as the Caribbean. When tariffs are adjusted, these are some of the immediate effects:
- Increased operating costs. Importing companies must absorb or pass on the cost of the tariff, which reduces their profit margin or increases the price to the end customer.
- Increases in selling prices. Whether it is an industrial lubricant for agricultural machinery or a motor oil for a commercial fleet, price increases directly impact maintenance budgets.
- Changes in logistics and planning. Faced with the possibility of new tariffs, many companies adjust their inventory strategies, buy in advance or seek alternative suppliers.
- Regional impact. In the case of Puerto Rico and the Caribbean, which are dependent on imports from the U.S., the news of possible tariffs raises concerns. If the U.S. imposes new charges on its exports, the cost of lubricant could increase considerably for markets such as ours.
Although new tariffs on petroleum products such as lubricants were initially anticipated, it has now been confirmed that they have been removed. However, since these types of measures can change at any time depending on the decisions of the U.S. government, it is important to stay informed and prepared for possible future modifications.
What businesses and consumers can do in the face of uncertainty
In times of instability in trade policies, both companies and consumers can take preventive measures:
- Maintain strategic inventories. Stocking essential products such as critical lubricants helps to mitigate risks in the event of price increases or logistical delays.
- Be informed about trade policies. Keeping a close eye on news and government decisions related to tariffs allows you to anticipate and make better decisions.
- Proactive maintenance. Prioritizing proper maintenance of equipment and fleets can extend their useful life and reduce the urgent demand for more expensive products in the short term.
How a trusted local company like American Petroleum can help you
Having a solid and experienced local supplier such as American Petroleum is key to face the volatility of the global market.
- Experts in logistics and sourcing. Our team has the ability to anticipate and react to sudden changes in prices or product availability due to tariffs. We adapt quickly to maintain continuity of supply. We also have local and cross-border suppliers that help us diversify and mitigate risk.
- Customized services. We offer tailor-made solutions according to the industry and size of your company. From scheduled deliveries to long-term contracts that ensure competitive prices.
- Inventory management consulting. We help our clients identify savings opportunities and evaluate alternative products that meet the same quality and performance standards, even when there are changes in the global market.
Our experience with critical industries in Puerto Rico and the Caribbean positions us as a strategic ally for those seeking safety, compliance and efficiency in the acquisition of lubricants and specialized products.
The uncertainty surrounding lubricant tariffs, as recently reported in the U.S., is a wake-up call for companies and institutions in Puerto Rico and the Caribbean. Being prepared, staying informed and having strategic allies is essential to continue operating without interruptions.
Want to know how tariffs can affect your operating costs? Contact your Account Representative to assess your situation, optimize your supply chain and plan ahead for possible changes in international trade policies.