Tariffs: We’re Ready to Help Minimize the Impacts
Well, Trump Tariffs are in the news again. As Yogi Berra so famously quipped, it’s déjà vu all over again. Here’s a flashback to our 2019 post.
While tariffs can sometimes give struggling industries some breathing room to reinvest, retool, and recharge, they nearly always bring higher costs to consumers and contribute to inflation in general. And when tariffs are enacted against the country’s top three trading partners, there are bound to be some unexpected outcomes. One certainty, however, is that China, Mexico, and Canada will not be paying for the new tariffs being implemented by the Trump administration, just like China didn’t pay for the tariffs in 2018-2019 when the Biden administration extended Trump’s earlier tariffs. Those who pay for tariffs are the importers, and ultimately the consumers (you), when those extra costs are passed on. But, read on…
Here’s the colorful breakdown that remains fluid:
CANADA
Canada: 25% additional tariff on imports (10% on Canadian energy resources).
According to whitehouse.gov, Trump says the Canadian tariffs were put into place because of the “Increasing presence of cartel-run fentanyl and nitazene synthesis labs, expanding international narcotics distribution.” Interestingly, US Customs and Border Protection says that only 59.6 pounds of fentanyl – the weight of your suitcase on your next trip abroad – was seized at the northern border with Canada in the previous calendar year. This is less than 1% of what’s been seized at the southern border during the same period. Canada immediately announced a matching 25% tariff on $155 billion in US imports, everything from automobiles to liquor, and Ontario, Canada’s most-populous province,
MEXICO
Mexico: 25% additional tariff on imports (10% on Canadian energy resources).
Breaking News as of February 3, 2025 Trump now says there will be a month-long pause in the Mexican tariffs because Mexico has agreed to send 10,000 troops to the border to stop the flow of fentanyl and other drugs. According to whitehouse.gov, Trump said the Mexican tariffs were put in place because “Drug cartels operate with government protection, facilitating fentanyl production and smuggling.” Mexico’s president Claudia Sheinbaum says that it is Mexico that is being flooded – flooded with illegal US guns smuggled in, and it is our drug consumption creating an insatiable demand that is the issue.
CHINA
China: 10% additional tariff According to whitehouse.gov.
Trump said the additional Chinese tariffs were put in place because of a “Failure to prevent the export of precursor chemicals used in fentanyl production and ongoing money laundering by transnational organizations.” China’s Ministry of Commerce claims it will file a lawsuit with the WTO in response
WHAT CAN BRANDED MERCH BUYERS DO?
As was the case during both Trump and Biden’s forays into tariffs over the past 7 years, resellers/distributors/stateside decorators will try to absorb some of the increases, but they/we cannot absorb them all. Corporate supply chain managers and departments must prepare for likely increases and rethink budgets accordingly. That may mean:
- Purchasing less-expensive items
- Maintaining quality but buying fewer items
- Refocusing on Phygital Services to connect with customers and employees to drive meaningful and measurable engagement.
It’s never too late to plan. Here is what our team suggests:
- Order NOW from pre-tariff inventory, but understand that freight costs may increase because importers moved en masse (with container and vessel demand) to try and get in under the wire.
- Buy Made in USA – more and more products are made locally by smaller artisans and even larger suppliers. Doing so also reduces freight costs and carbon footprint. Perhaps one day (again) Made in USA will be the ring true for most branded merch, but the challenge is that reshoring or nearshoring does not exist in a way that meets lower overseas price models right now. Approximately 90% of hard goods (pens, journals, power banks, for example) are produced in China today, and a similar infrastructure no longer exists in the US. The US market could not support the lower wages in China necessary to produce quality goods at prices US corporate consumers currently enjoy.
- For apparel, we can work with factories in Vietnam, South America, and India. Ask your Account Manager how you can get samples and presentations that include these high-quality options. But know that higher minimums and turn times will be extended.
- Seek tariff exclusions as an active citizen consumer. Each time tariffs arise, the US Government asks for comments from the citizenry. And every time, various aspects of the tariffs are adjusted or amended based on this feedback. Jump into the fray and make your voice heard!
Spoiler alert: We’ve got you.
As we mentioned in our Tariffs Blog back in 2019, it’s not all bad news. Despite the volatility, uncertainty and adverse impacts that may come from swift and sweeping mandates, it should create some positive change as well. It should drive innovation and new product categories, domestic sourcing and diversification of supply chains in our amazing industry and hopefully more sustainability-focused marketing initiatives.
This pricing turbulence gives us a chance to interact and be more strategic with you. To discuss the complexities of our fascinating industry and together, to show how thoughtful, sustainable choices create the desired impact. That’s a big bonus for us all. The tariff discussions we’ve already had with many of you have provided just those opportunities, and we hope this “Sky is not falling” blog helps educate and gives you peace of mind that your Brand Fuel team is here to help us all navigate with little pain.