As the government administration continues to announce changes to import/export tariffs, many are wondering what the implications will be for the ad specialty industry. The economic consequences of these new regulations are sure to be felt in the industry, as higher prices for end users may mean less demand for promotional products.
Tariff Changes Explained
Tariffs are taxes or duties that are paid on a particular class of imports or exports. The Office of the United States Trade Representative (USTR) is the government agency responsible for developing and recommending US trade policy to the President of the United States.
Tariffs from Canada implemented on July 1, 2018 impose a 10% surtax on a select group of imported consumer products with a country of origin of the United States.1
Proposed tariffs on China may have a significant impact on the promotional products industry. The USTR is currently in a 90 day public consultation period, including a hearing, where 6,000+ items are being evaluated. A final list of impacted items will be published by the USTR after this consultation period ends. The products on this finalized list will see a tariff increase of up to 25%, dependent upon on the item classification.2
Promotional Products Industry Impacts
As proposed tariffs may increase the cost of imports, some businesses may need to pass rising costs along to the consumer. End users in tariff-impacted countries could start reducing their promotional budgets and workforce as cost-saving measures, leading to a decrease in sales for promo distributors and suppliers.3
The USTR consultation period for product exclusions ends on October 9, 2018. This will be followed by a 14 day period for the public to file responses to the request for product exclusion, and an additional 7 day period for interested parties to show support or opposition to the final list of impacted products.4
Promotional industry associations have joined forces with other organizations representing U.S. businesses to express their concerns over the new regulations to the USTR. These industries are using their collective voice to express concern over these proposals due to the rise in consumer prices that may be the result of these new tariffs.5