Rising Tariffs & the Impact on the Promotional Products Industry

Promotional Products | July 12, 2019

Increased tariffs have a dramatic impact on the promotional products industry—which directly affects the customers. Read on to learn more about how the industry is reacting to this change.

Tariffs on approximately $200 billion worth of Chinese goods raised from 10% to 25%, following a breakdown in trade negotiations between Chinese and U.S. officials. The President has also mentioned that he may extend the tariffs to almost all Chinese imports should the stalwart continue. Unfortunately, these trade wars have a significant effect on the promotional products industry. Price increases on Chinese-imported products are inevitable.

 


 

What is a tariff?

A tariff is, in its most basic form, a tax. And just like paying sales tax on almost any product purchased in the USA, the purchaser pays the tax, which is collected by the seller and paid to the state tax collection agency.

An example of this would be if Chinese Company A sells backpacks to American Company B, Company B would pay the tariff to the customs agency at the border in order to bring the backpacks into the USA. The effect of this is a higher cost to purchase the backpacks, and Company B will need to recoup that by increasing the sales price of the backpacks to their customers.

The Repercussions

Backpacks and tote bags, drinkware (including stainless-steel tumblers), stationery, headwear, various apparel items, leather products, plastic products, technology items/electronics such as charging cables, and much more are a sampling of the products likely to be hung with steeper price tags, according to the Advertising Specialty Institute.

It’s impossible to know the exact percentage of price increase that will come out of these tariffs, but industry insiders suspect at least 10% – 20% increases on imported products from China. As negotiations continue, the true effects of these tariffs will become more apparent. In the meantime, suppliers are doing everything they can to source products from the United States and other countries with free or almost-free trade.