This Week in Imaging: What Does Fujifilm’s Lawsuit Mean for Xerox? Plus, U.S. China Tariff Effects; More

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Photo credit: Kathy Wirth

Fujifilm’s filing of a $1 billion breach-of-contact lawsuit this week in federal court against Xerox for scrapping the $6.1 billion deal announced in January was the big news this week. While we can’t predict how this case will go – although a New York judge’s ruling in April against the merger citing a conflicted Xerox CEO and board won’t help Fujifilm – it’s likely to keep Xerox in court for months.

That’ll likely hinder Icahn-backed Xerox CEO Visentin‘s efforts, and those of the new Xerox board, to sell Xerox, either to a competitor, to a private-equity firm, or via auction sale.

The other big news occurred late last week, with the Trump administration’s imposition of a 25-percent tariff on $50 billion of Chinese goods – including printers and copiers, and their parts and accessories.  Reuters calculates that the top five products affected are color TVs, cars, copier parts, aluminum alloy plates, and hard drives. Moreover, on Monday of this week, President Trump threatened to increase the tariffs on an additional $200 billion of Chinese goods (if China responds with retaliatory tariff measures), effectively wiping out any U.S. stock-market gains that have occurred this year.

Although the tariff is said to be designed to protect American companies’ IP rights, as an HP Inc. spokesman pointed out recently, it won’t in any way help vendors such as HP Inc., Canon Inc., etc. to compete with the flood of cheap China-made toner and ink cartridges being imported into the United States. That ink and toner will still be pouring in. HP Inc. is seeking exclusions for its OEM toner and ink cartridges made in China, and other OEMs would be wise to do so too.

The Imaging Supplies Coaliton (ISC) also stated that the 25-percent tariff would do nothing to protect OEMs from the deluge of third-party supplies imported from China. The tariff would also do nothing to protect U.S. third-party, non-OEM toner and ink-cartridge makers.

We saw this first-hand in a recent test program under which we purchased a variety of the most popular non-OEM alternative toner cartridges from Amazon.com worldwide. All of them were of Chinese origin and we found that their cost was roughly one-quarter that of the OEM toner cartridge. Even with a 25-percent tariff, the third-party alternative cartridges will still be considerably less-expensive than OEM cartridges. Moreover, U.S.-based non-OEM alternative toner-cartridge companies source most of their “repair” parts from China, which could now also be subject to a tariff. Ultimately, the inevitable price increases on all fronts may also encourage more users to experiment with alternative cartridges – a majority of which originate in China.

For its part, China could also impose tariffs on printers and copiers sold in China by U.S. companies.

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