Colorado company wins one tariff battle but worries about more to come

Global Business

Colorado company wins one tariff battle but worries about more to come

The trade dispute between the United States and China has made this a nervous time for many U.S. businesses. Some have already been hit with tariffs. Others worry about moves yet to come. But still others have been given a last-minute reprieve, like the one CGTN’s Hendrik Sybrandy found in the U.S. state of Colorado.

Shihan Qu is the founder of Zen Magnets, a Colorado business that makes small magnet balls that provide stress relief, serve as desk toys and offer users a serious creative outlet.

“The people who are hobbyists for these magnets, they spend hundreds of hours every month building the craziest things with hundreds of thousands of magnets,” Qu said.

Videos posted on the company’s website show just a few of the possibilities. To manufacture its products, Zen Magnets relies on neodymium permanent rare earth magnet spheres, 97 percent of which Qu said come from the city of Ningbo, China. Which is why a proposed 10 percent U.S. tariff on rare earth metals had him so worried.

“This would be really devastating for us,” Qu said. “It’s not like there’s any alternatives if we could not purchase these magnets from China.”

The tariff, originally part of the most recent package of U.S. tariffs targeting an additional $200 billion worth of Chinese goods, so upset Qu he wrote to the U.S. Trade Representative asking for relief. If the tax remained in place, he argued, he would be out of business in a matter of weeks and forced to lay off all his employees.

“There’s no home grown industry to support here, it’s only shooting ourselves in the foot here,” he said.

Fortunately for him, 297 categories of products were removed from the U.S. tariff list in September, including such diverse items as smartphones, human hair for wigs, and yes, rare earth metals.

“I’m glad and it’s a big sigh of relief,” Qu said. “I was pretty confident that I was going to be subject to a tariff.”

This was not Qu’s first encounter with the U.S. government. In 2012, the U.S. Consumer Product Safety Commission told Zen Magnets to stop selling the magnets, claiming they posed a safety hazard to children who ingested them.

“I thought that was outrageous and dumb and we wouldn’t be having these problems if we sold these magnets as ammunition,” he said.

At one point, he was forced to burn 400,000 of his products in an industrial oven to destroy their magnetism. Finally this summer, a judge ruled that for now, Qu is free to sell his magnets, now without the price increase a tariff would have required. He’s tired of battling to save his small company.

“I was tired a long time ago,” he said. “I was tired year two or three… I was ready to quit multiple times but I also didn’t expect to win multiple times.”

Qu is one of the survivors of the current trade war, at least for now.

“Even having come this far I’m grateful,” he said.