Search
Homepage This page's url is: -crn- Rankings and Research Companies Channelcast Marketing Matters CRNtv Events WOTC Jobs HPE Discover 2019 News Cisco Partner Summit 2019 News Cisco Wi-Fi 6 Newsroom Dell Technologies Newsroom Hitachi Vantara Newsroom HP Reinvent Newsroom IBM Newsroom Ingram Micro ONE 2019 News The IoT Integrator Juniper NXTWORK 2019 News Lenovo Newsroom Lexmark Newsroom NetApp Data Fabric NetApp Insight 2019 News Cisco Live Newsroom HPE Zone Intel Tech Provider Zone

Partners Brace For Backlash As Trump China Tariffs Hit Juniper Networks Customers

Juniper Networks has inked its name on the list of major networking vendors to hit customers with additional charges in response to U.S. tariffs on goods made in China.

Juniper Networks has inked its name on the list of major networking vendors to hit customers with additional charges in response to U.S. tariffs on goods made in China, and solution providers say the situation could make the relationship between the vendor and its customers tense.

A senior executive at a U.S. solution provider that works with Juniper and a host of other major networking vendors said Juniper is adding an additional 3.5 percent charge on products that contain parts from China. "We got an email from Juniper, but an official announcement I haven't seen," he said. "We had official communication from Arista. We had official communication from Cisco."

President Trump's 10 percent tariff on Chinese goods went into effect last Monday.

Juniper's prices aren't changing, per se, said the solution provider executive. "There's going to be a new line item that says, 'additional tariff,' he said. "It'll be a new quote, and we sent emails last week to people with projects that were going to be impacted." Cisco notified partners of a 10 percent price increase on thousands of individual SKUs last week.

Solution provider have told CRN recently that any increases will be shouldered by customers, and the executive said the situation threatens the relationship between customers and vendors.

"Manufacturers are going to find the pushback is going to land on their doorstep," the executive said. "Customers will pressure the manufacturers to eat that cost. I can understand that would be the ask from an end user, but I don't think it's realistic. The manufacturers will say, 'We're not going to bear the impact of a trade war between the US and China,' and we're looking to make the clients understand that this isn't a policy that's been built by us or the manufacturer, but it is affecting us in the networking space."

The executive said he expects the tariffs and resulting price increases to slow business with some customers and accelerate it with others. "My concern is that customers will respond suggesting that they'll wait it out on purchases they have scheduled for now," the executive said. "They have the money in the budget, and they figure it's just better to wait and see if the U.S. and China can come to some agreement."

On the other hand, the tariffs are scheduled to increase to 25 percent in January, the executive noted. "Some will hit the pause button, but others will say If I don't pull the trigger now, it could be double in January. It's a bit of wait-and-see. We're pressing as many open, live projects as we can, and we have seen some accelerating to get it done. We've seen an uptick, a surge that brought forward a few projects, but not everybody did that."

A senior executive at another U.S. solution provider that works with Juniper said he has received nothing from Juniper outlining the new pricing regime. "There's no clarity," he said, from any of the major networking vendors.

A top executive at another U.S. solution provider that works closely with Juniper said he too is concerned about the impact the charges will have on customers, including purchasing delays and moving to competing vendors. "It could cause delays," the executive said. "Deals could be delayed or canceled because the customer had budgeted for stuff and now perhaps they don't have the appropriate budget. That could open the possibility for an alternative vendor. If someone is bringing in new technology, they'll look at what else is out there."

For now, though, it's status quo, the executive said. "It shouldn't change the margins for us. If the list price goes up 10 percent, we are still getting the same percent discount. We're trying to sell at the same pricing on the normal profit margin."

Prior to introducing pricing increases, global networking leaders including Juniper, Cisco and Hewlett Packard Enterprise and Dell last month sent a letter to U.S. Trade Representative Robert Lighthizer urging him to hold off on imposing the tariffs.

"If the USTR were to impose a 10-25 percent additional duty on networking products and accessories, it would cause broad, disproportionate economic harm to U.S. interests, including our companies and U.S. workers, our customers, U.S. consumers and broader U.S. economic and strategic priorities," the letter to Lighthizer said.

A Juniper spokesperson said that the company “has a global footprint that we will continue to sustain with a global supply chain. We are aggressively implementing mitigation measures to minimize the impact of potential tariffs as much as possible in order to uphold our competitive pricing and value while still delivering quality solutions and innovative technology to our customers and partners.”

Juniper, despite being a fraction of the size of market leader Cisco, is one of the top 5 networking vendors globally and is particularly successful in the service provider segment. In a mid-September blog post, Juniper CFO Ken Miller acknowledged that the tariffs would result in additional charges.

"Following suit with others in the industry, Juniper will be passing along the unmitigable portion of the tariff costs of impacted products to our partners and customers as addition import tax charges. Therefore, all orders for impacted China-origin products shipping to U.S. locations on and after Monday, October 1, 2018 will be subject to this additional import tax. While this cost is an unfortunate increase for our customers, we are diligently working to mitigate the added burden."

Steve Burke contributed to this story.

Back to Top

Video

 

sponsored resources