Industry Companies Consider Postponed Tariff Expansion

Earlier this week, the White House announced that it would postpone its planned January 1 tariff escalation for 90 days following a bilateral meeting at the G-20 Summit in Buenos Aires, Argentina, between President Trump and Chinese President Xi Jinping. Tariffs on approximately $250 billion in Chinese imports had been set to rise from 10 percent to 25 percent at the start of the new year.

The U.S. and China will work to come to an agreement over the two countries’ trade disputes. If no agreement is reached, the U.S.’ proposed 25-percent tariffs will go into effect on March 1, 2019. PPB Newslink reached out to several industry companies on how this news is affecting their handling of the tariff issue.

“Our position has always been that the tariff announcements and process is part of a larger negotiating approach, and it’s one more component in our pricing structure,” says Bill Mahre, CAS, president of Hugo, Minnesota, supplier ADG Promotional Products. “We’re not doing anything different with our pricing because of the G-20 announcement, as it doesn’t have an impact on our business at this time. We have a good understanding of the tariffs and their effects on our products, so we’re letting this play out and will deal with it if we get to it.”

In preparing for the originally expected January 1 jump to 25 percent, industry companies are well positioned as the increase date is pushed back.

“At Prime we were working very hard with our supply chain and vendors to bring our goods in early in anticipation of the increased tariffs. In fact, we have a significant amount more inventory than we did this time last year,” says Jeff Lederer, president of Prime Line, part of the alphabroder family. “We just want distributors to have the peace of mind knowing they could count on Prime for inventory and stable prices. We were preparing for the 25 percent, should that have been or will be instituted. Distributors working with Prime can expect stability with pricing going into the first quarter of 2019. Our goal is to be clear and transparent with how pricing might affect the market if things change with the USA and China tariff situation.”

He adds, “Prime has recently adopted a more variable pricing and product intro model where any changes would be communicated on our website Primeline.com and along all other industry platforms like the ESP, SAGE and Promostandards feeds. Since the existing tariffs were in place in September, any prices we had to adjust (higher or lower) have been in effect. It’s our goal to work closely with distributors in a transparent way and leverage our extensive supply chain, even in the face of cost pressures all around, in a way that will have the least impact to customers.”

Melissa Ralston, chief marketing officer at BIC Graphic, says, “While we are hopeful, we won’t know the full implications on the promo industry until negotiations are complete. Luckily, BIC Graphic has a broad assortment of USA-made items—nearly 50 percent of BIC Graphic’s order volume is produced in our U.S. facilities—and product sourced from other areas such as South Korea, Vietnam and India to provide additional options that will not be impacted by potential tariff increases. We expect suppliers, distributors and end users will be mindful of cost increases in all areas of their business as a result of tariff increases. Having these items available provides options for budget-conscious end users who may be dealing with other increases in costs.”

 

filed under December 2018 | tariffs
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