Could the US-China trade war extinguish Juul’s hot streak?

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The Trump administration’s tariffs on Chinese imports mostly apply to industrial items, but consumer products are also getting hit. Juul, the hottest vape pen on the market, may be among them.

The $34 billion in tariffs that went into effect on July 6 did not cover e-cigarettes, but a separate round announced in June—25% on $50 billion worth of Chinese imports—includes levies on “other machinery.” That round of tariffs does not yet have an implementation date, but Juul’s popular vaporizers, which are made in Shenzen, China, fall into the “other machinery” category.

It’s unclear whether Juul would pass on such a tax to buyers of its $50 vaporizer. The company did not respond to a request for comment.

Until now, the only thing slowing Juul’s growth was criticism; its products have been accused of getting teenagers hooked on nicotine. But the company’s revenue grew 783% in the 52 weeks ended June 16, hitting $943 million, according to a Wells Fargo analysis of Nielsen data. (E-cigarette sales overall grew 97% to $1.96 billion in the same period.) Earlier this month, Juul raised $650 million on a $15 billion valuation (paywall) and the company is also hoping to expand internationally.’

Of course, current Juul users need not worry about fallout from a trade war. Unlike the vaporizers, Juul’s “pods”—nicotine-rich disposable cartridges—are made in the United States.

a close up of a mans face: A woman using a vaporizer© Provided by Quartz
A woman using a vaporizer

2018-07-14 02:00:37

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