In light of the escalating trade war with China, you may be asking “How will China tariffs affect my business?” We hear you, and we’re concerned, too. We reached out to some of the top suppliers in the promotional products industry to find out what to expect if the trade war continues.
Here’s what we know for sure:
The third round of tariffs that went into effect on October 1st imposed a 10% tariff on an additional $200 billion worth of Chinese goods. Unless something changes, those tariffs will rise to 25% on January 1, 2019. At this point, the tariffs only affect certain products.
Which promotional products have been affected?
The USTR Tariff list includes a lot of products outside of the promotional products industry, such as fresh and frozen food, auto parts, and machinery. Here’s a quick list of the promo items affected so far.
Headwear (caps, beanies, etc.)
Zinc Alloy and Aluminum Items
Emory Boards & Pumice Stones
Also, keep in mind that many of these items can be sourced outside of China, too.
What should we expect going forward?
#1: Many companies won’t publish printed pricing for 2019.
Since we don’t know for sure if additional tariffs will go into effect in January, many companies will shy away from published prices in print catalogs. Aakron Line, for example, plans to print prices for their USA made items, and include a “Tariff Target” logo next to imported goods. According to a recent email from Aakron Line’s President and CEO, those items “will feature one ‘as low as’ price point to give you a sense of where pricing is for that item.” Other companies that typically produce large, full product catalogs will opt to print limited runs or smaller catalogs.
#2: Ultimately, prices will go up for items that are affected by the tariffs.
According to apparel supplier Alphabroder, the last round of tariffs didn’t make a big impact on apparel, but it did affect pricing on caps and bags. Some suppliers already raised prices for the remainder of 2018, while others told us that they will absorb the increase until January 1st.
What does this mean for you? Understand that pricing on Chinese goods will fluctuate in the coming months. Ask for updated quotes and let your sales rep know if the project is still a few months out from production. (In other words, don’t bank on a quote from six months ago still being valid in January.)
David Nicholson, President of Polyconcept North America, wrote in an email that PCNA “will be providing two prices on all quotations for WorldSource projects (long lead time, direct-import orders). The second price will reflect the product cost should the tariffs go into effect. “
#3: Production will shift from China to other countries, especially for custom jobs.
Production for some items already started shifting from China to places like Vietnam or Bangladesh, and we expect that trend to continue. Jim Haworth, CEO of Outdoor Cap, told us in a recent email that “all attempts will be made to source your custom orders outside of China to save you additional costs. In the event where the fabric, shape, or technique requested is only available from a China partner, we will source from them and include the additional tariff cost to deliver the product to your specifications.”
In spite of all this uncertainty, we do also offer a number of American-made products and those prices are fixed.
When in doubt, just ask.
We understand that fluctuating pricing can be unnerving, but we want to support you and your business through this process. If you have a question or concern about the tariffs, please reach out to us. We will do everything we can to address your concerns and help you make the most of your marketing dollars.