The promotional products industry has been on high alert regarding import tariffs. This has been a concern ever since the first Trump administration imposed new duties on specific categories of Chinese goods which you can read about in BAMKO’s four-part white paper. Now, with the President-elect’s second term secured, the possibility of across-the-board tariffs is back in the spotlight.
This means one thing in the promo industry: the cost of your merch could increase.
Businesses are already beginning to proactively anticipate challenges these new tariffs could create, according to this article by the New York Times.
At BAMKO, we believe in proactive solutions. That’s why we’re urging you to arrange your shipments now to avoid potential price hikes and keep your marketing campaigns on budget.
The Impact on Your Promotional Products
During the first Trump administration, tariffs were imposed on a range of Chinese goods, including certain categories of promotional products. These tariffs acted as an additional tax on imports, ranging from 10% to 25%.
The initial tariffs were strategically applied. They focused on specific product categories and items where alternative sourcing options existed. This meant many products, particularly those exclusively manufactured in China, were largely exempt. The Biden administration lowered some of these tariffs but kept the majority in place. This suggests that while the tariffs caused some disruption, their overall impact wasn’t significant enough to warrant a complete reversal.
In today’s global economy, most companies rely on overseas trade in some form. The promotional products industry in particular is susceptible to market volatility and supply chain disruptions, as so much of the end-product originates overseas.
The Risk of Broader Tariffs
Trump has proposed implementing a 10% or 20% tariff on everything that comes into the United States, and a 60% or 100% tariff on everything entering from China. This could lead to significant cost increases in all industries, particularly on products, parts, and materials coming from China.
The National Retail Federation (NRF) predicts that this would result in double-digit price hikes and a significant reduction in consumer spending. This would certainly have a massive impact on the promotional items industry.
Here’s a breakdown of the potential impact:
Increased Costs:
- Raw Materials: Tariffs on Chinese imports would directly increase the cost of raw materials for promotional product suppliers.
- Finished Goods: Even if certain products are assembled domestically, components are often sourced from China. This means the cost of finished goods would also rise.
- Shipping and Logistics: Tariffs can disrupt supply chains and increase shipping costs, further adding to the overall expense.
Reduced Demand:
- Higher Prices for End-users: Suppliers would be forced to pass on increased costs to distributors and ultimately to end-users. This means businesses would pay more for promotional items, potentially leading them to reduce their orders.
- Consumer Spending Decline: The NRF predicts a decline in overall consumer spending by $78 billion annually. This means less discretionary income available for businesses to invest in marketing and promotional activities.
These import tariffs can have a significant and immediate economic impact. There is no legal requirement for any advance notice when instating these tariffs, and it can be done without congressional approval. This means these tariffs could be implemented suddenly, with no prior warning, leaving businesses with no time to adjust. Companies could be forced to absorb increased costs, potentially leading to layoffs or reduced profits.
For companies that do not rely on foreign suppliers and produce products domestically, price hikes will not have an immediate impact. However, if prices rise on products from most foreign imports, eventually price increases will trickle down to all consumer goods.
To mitigate this risk, BAMKO strongly recommends that businesses develop contingency plans to address potential price increases. According to the Washington Post, companies that rely on Chinese or other foreign suppliers and manufacturers are already preparing to raise prices in response to whatever tariffs Trump imposes.
Staying Ahead of the Curve
At BAMKO, we’ve been proactively mitigating these risks since 2018 by diversifying our supply chain, working with a variety of overseas suppliers and vendors, and maintaining our in-house facilities and warehouses. This strategy ensures greater stability, flexibility, and cost control in the face of market fluctuations.
As a subsidiary of Superior Group of Companies, BAMKO has a unique ability to leverage a mature global sourcing operation. We manufacture across the globe, with offices and factories throughout North, Central, and South America, as well as all across Asia and Africa.
Regardless of the specifics of the eventual tariff policy, BAMKO is well-positioned to continue to stand out in the industry. In addition to our best in class supply chain operations, our marketplace advantages are heavily rooted in technological superiority, strong creative and design services, carefully cultivated client relationships, and creating value through thoughtful and effective promotional campaigns. While volatility in that marketplace is certainly undesirable, we are well-positioned to navigate choppy waters.
Proactive Planning for 2025
While we’ve taken these steps to mitigate risk, the global situation remains unpredictable. Therefore, to ensure the best possible pricing and timely delivery, BAMKO recommends placing orders and arranging shipping as early as possible to minimize your risk of potential cost increases in January 2025. We will continue to carefully observe as more details are made public about the proposed tariffs and will continue to provide updates as necessary.
Contact your BAMKO representative today to discuss your needs and secure your order. Our team is ready to assist you with order placement, shipping arrangements, and any questions you may have.
