Industry Companies Prepare For Impact Of Tariff Increases

Last week, tariffs on approximately $200 billion in goods imported from China increased from 10 percent to 25 percent. In a Breaking News alert on Friday, PPB Newslink reported that President Trump has also threatened to extend the tariffs to virtually all Chinese imports—more than half a trillion dollars—should the two sides not come to a satisfactory agreement in the current negotiations.

The Chinese government has since responded, announcing its own 25 percent tariffs on $60 billion worth of U.S. imports. China’s tariffs are set to go into effect on June 1, but the announcement still shook U.S. stock prices—the Dow Jones Industrial Average closed down 617 points, or 2.4 percent, on Monday, while the Nasdaq composite slipped 3.4 percent. Negotiations in the dispute are ongoing, and President Trump and President Xi Jinping are set to meet next month at the G-20 Summit in Japan.

In the interim, promotional products companies are working to stay current on how these tariffs will affect their bottom line and how best to work with and communicate to customers.

“There are a lot of different products in our industry and some will be affected by the tariffs and some won’t be,” says Bill Mahre, CAS, president of supplier ADG Promotional Products. “Last year, we saw the 10 percent increase and priced accordingly, and with this raise to 25 percent, we’re looking into it on a case-by-case basis.”

Janie Holbrook, co-owner of Tee It Up Promotions in Oakton, Virginia, notes that goods shipped from China after May 10 will have the 15-point tariff increase added to them. She doesn’t expect suppliers to absorb the increase but suspects that how and when they are implemented may vary by supplier. She says, “At a trade show a week ago, all of the supplier staff had been trained to deliver catalog fliers along with the ‘pricing may not be current; so check the website,’ caveat. It’s probably best to reach out to suppliers of products that are of specific concern and ask them how they will be dealing with the tariff changes. If an order is large and there is a lot of inventory, either in the US. or on the water, before May 10, ask whether the supplier will give you some price protection for a week or 10 days.”

As for her communicating with her own customers, Holbrook adds, “I often send out quotes that do not become firm orders for days, weeks or months while customers wait for internal purchase orders, work with committees, etc. Since last September, I have been adding notifications that read: ‘Pricing subject to change as a result of tariffs on Chinese imports. Pricing will be confirmed when order is finalized.’”

Leigh Summers, marketing director at Aunt Beth’s Cookie Keepers in Jacksonville, Florida, says, “The importer at the docks pays the tariffs, and the funds to pay them come from the American companies that purchase promotional products from China. Up to now, most suppliers have covered the 10 percent tariff, but it may be impossible to cover it at 25 percent. Keep your fingers crossed they work it out before it gets any crazier.”

Mahre adds, “I try and look at this in a pragmatic way. We don’t know when the tariffs will be resolved. They haven’t been written into law and could disappear tomorrow. None of us have a crystal ball, so we need to stay flexible. I don’t think anyone is anticipating this to be a long-term situation. Eventually cooler heads will prevail.”

filed under May 2019 | Tariffs
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