After a 30-day pause, 25% tariffs on imports from Canada and Mexico have gone into effect, impacting promotional products companies throughout North America and igniting a global trade war.
- On February 1, President Donald Trump announced that he would be levying the tariffs on the United States’ neighbors to the north and south, citing illegal immigration and drug trafficking.
Trump has also increased tariffs on imports from China to 20% after imposing an additional 10% tariff last month.
Both China and Canada wasted no time retaliating. Beijing announced it will impose additional tariffs of up to 15% on imports of U.S. farm products, including chicken, pork, soy and beef. Those tariffs will go into effect on March 10, but goods already in transit will be exempt until April 12, The Associated Press reported.
Canadian Prime Minister Justin Trudeau announced that a $155 billion retaliatory tariff package, which had been delayed due to the 30-day pause, would be reinstated.
- The initial phase of Canada’s tariffs on the U.S. includes an immediate 25% tariff on $30 billion worth of U.S. goods, such as apparel and footwear, pulp and paper, cosmetics and more.
- A second phase, involving an additional $125 billion in tariffs, will be finalized after a 21-day public consultation period and potentially target vehicles, various food, and steel and aluminum products.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau says.
On Tuesday, Mexican President Claudia Sheinbaum announced that Mexico will impose retaliatory taxes on U.S. goods.
Given the roller coaster of tariff news over the past month, it’s easy to see why some promo leaders are waiting before acting.
“We can’t do any long-term planning because this administration has proven things can change weekly,” says Asif Bandeali, COO of Canadian supplier Fairdeal Import and Export. “At this point, we’ll be patient and adapt to the market conditions as they change.”
Asif Bandeali
COO, Fairdeal Import and Export
Keeping in line with the “theatrics” that have surrounded these tariffs from the start, Anthony St. Peter, president of supplier Stellar Lanyards, which is headquartered in Mexico City, said earlier this week that he wouldn’t be surprised to see a last-minute pause or new agreement by the end of Tuesday.
“Trump initially demanded that both Mexico and Canada strengthen their borders to avoid tariffs,” says St. Peter, a 2024 PPAI Rising Star. “In his own words [on Truth Social on Sunday], February saw the lowest illegal border crossings on record. Given this, it’s becoming increasingly unclear what these tariffs are truly meant to address.”
Anthony St. Peter
President, Stellar Lanyards
Promo’s Response
Items sourced into the U.S. in which the country of origin is China, Mexico and Canada will likely experience price increases, with some of the additional costs expected to be assumed by suppliers and distributors, and more being passed along to end buyers.
Exporters from Canada and Mexico, where several American suppliers diverted manufacturing in the nearshoring movement of recent years, also express worry about the ripple effect these tariffs will have on the branded merchandise industry.
“A tariff war will disrupt business across all sectors, creating uncertainty that affects everyone from manufacturers to end consumers,” says Kathy Cheng, founder and president of Toronto-based supplier Redwood Classics Apparel.
Kathy Cheng
Founder/President, Redwood Classics Apparel
Suppliers that generate most of their revenue from Canadian customers, such as Toronto-based Canada Sportswear, can afford to pass along the brunt of the increased costs to U.S. distributors and importers without worrying about the risk of losing those clients.
In fact, Ralph Goldfinger, co-CEO of Canada Sportswear, says that contracts with U.S. clients will clearly specify that the importer will bear the full tariff. “Regarding our inputs, we have already sourced other countries with comparable products, so the U.S. will lose out on that business,” Goldfinger says. “In each case, the tariffs will have unintended consequences to the U.S. consumer and to U.S. businesses.”
Conversely, Peterborough, Ontario-based supplier Bravo Awards aims to reduce the burden on its customers south of the border.
“We’ll continue to serve our U.S. market, working to shield our customers from any significant price increases,” says Chris Collins, head of business development at Bravo Awards. “We’re also going to be amping up our marketing and support for our valued Canadian customers, where the climate is more stable.”
Chris Collins
Head of Business Development, Bravo Awards
Cheng says PPAI 100’s No. 12 supplier Vantage Apparel, which became the exclusive provider of Redwood Classics products in the U.S. last summer, brought in additional inventory ahead of the tariffs.
“Proactively, we’re ensuring that U.S. distributors continue to have access to premium products without disruption or impact on pricing,” Cheng says. “This strategic move reinforces our dedication to delivering exceptional apparel solutions while maintaining cost stability for our partners. We remain committed to navigating industry challenges with innovation and foresight, so our customers can continue to rely on us for excellence in service, selection and supply chain management.”
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Promotional Product Professionals of Canada (PPPC) is actively collaborating with its logistics partner to plan a webinar to assist and help members better navigate these changes. Its technology partner SAGE offers tools that enable members to specifically search for Canadian-friendly products.
The association also continues to work closely with its strategic partners and members to gain insight and share resources and expertise, according to Jonathan N. Strauss, president and CEO of PPPC.
Jonathan N. Strauss
President/CEO, PPPC
“As we face the reality of new tariffs, the strength and resilience of the Canadian promotional products industry remain unwavering,” Strauss says. “Through our collective determination, we’ll continue to ensure we help our members thrive during these changing times.”
PPAI Board Chair Denise Taschereau, CEO and co-founder of Vancouver-based distributor Fairware, warns against knee-jerk reactions, particularly, members abandoning companies that operate in Mexico and Canada.
“It’s critical to understand the impacts,” Taschereau says. “Traditionally, tariffs are anchored in country of origin, so your partners in Mexico or Canada who are decorating goods from overseas shouldn’t be impacted. We want to continue to support those brands and uplift them at a time like this.”
Denise Taschereau
PPAI Board Chair
PPAI, working closely with our lobbyists at Thorn Run Partners, sent a letter to top congressional leaders urging them to work toward a balanced trade policy that protects American interests while ensuring that American businesses, such as those in the promotional products industry, are not disproportionately burdened.
- Download the text of that letter here so you can use it as a template to send your own letters to your representative and senators.
- Every year, PPAI members and staff travel to Capitol Hill to advocate for the promotional products industry, and tariff concerns will be one of the key issues we will be discussing with members of Congress in April. (Learn more about LEAD here.)
‘Partners, Not Adversaries’
Winnipeg, Manitoba-based supplier Botanical PaperWorks, which sells seed paper to distributors in Canada, the United States and Europe, has been preparing for the possibility of tariffs since the end of 2024.
- Thus, the company has been shipping orders quickly to get them to customers before the levies were implemented.
- Plus, the firm brought in six months’ worth of key inputs for production in anticipation of retaliatory tariffs.
“We’ve been constantly assessing what’s best for the business, our team and our customers,” says Heidi Reimer-Epp, CEO and co-founder of Botanical PaperWorks. “We can’t predict the full impact or what lies ahead, but by developing a plan, we’ll be able to pivot when needed and reduce risk.”
While a tariff of any size creates additional complexities for cross-border trade, a 25% tariff adds a very large cost to the transaction. Furthermore, Reimer-Epp is concerned about decreased Canadian sales as the country braces for an economic downturn. As a result, her team is looking for ways to produce more efficiently to work with its U.S. customers to offset the tariff.
Heidi Reimer-Epp
CEO/Co-founder, Botanical PaperWorks
From a logistics perspective, the team has been working with its customs brokers to ensure smooth transit across the border. The team is also working closely with Canadian distributors whose customers are looking for domestically produced promotional products.
“Whether our distributors are in Canada or the U.S., we’re thankful for them and we’re here to support them during this time,” Reimer-Epp says. “Our plan evolves as the tariff situation changes, so we’re keeping lines of communication open with distributors. We’ve also been communicating our ability to continue supplying our American and Canadian customers’ seed paper needs – we have high quality product ready to ship.
“We need to keep the promotional products industry strong, and we’ll do that together, as partners, not as adversaries.”
Still To Come
Trump has also indicated that the promised global reciprocal tariffs will go into effect on April 2, one day after a study among his administration on the levies is scheduled to conclude.
However, administration officials are privately indicating that the full reciprocal action will take up to six months or even longer, The Wall Street Journal reported.
The office of the United States Trade Representative (USTR) has announced a public call for comments to identify and review “unfair and non-reciprocal” foreign trade practices.
The USTR says its particularly focused on major trading partners, especially G20 nations and countries with significant trade deficits in goods with the United States. These countries include:
- Argentina
- Australia
- Brazil
- Canada
- China
- European Union
- India
- Indonesia
- Japan
- Korea
- Malaysia
- Mexico
- Russia
- Saudi Arabia
- South Africa
- Switzerland
- Taiwan
- Thailand
- Türkiye
- United Kingdom
- Vietnam
Collectively, these nations account for 88% of total goods trade with the U.S., according to the USTR.
The deadline for submissions is March 11. Comments can be submitted through the USTR’s online portal under docket number USTR-2025-0001.
- The global reciprocal tariffs are in addition to 25% tariffs on steel and aluminum imports from all countries scheduled for March 12.
- Last week, Trump signed an executive order instructing the Department of Commerce to investigate whether to impose tariffs on copper and derivative products to protect national security.
- If that’s not enough, Trump also threatened to impose 25% tariffs on imports from the European Union, claiming that the EU was formed “to screw” the U.S., CNBC reported.
- He also has paused his previous order to eliminate the de minimis exemption that allowed packages worth less than $800 to enter the U.S. without having to pay a tariff or duty.
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
