In the past few months, President Donald Trump’s foreign tariffs on various countries, including previous trade allies, and the ensuing global trade war, have combined to accelerate a conversation that has been happening for the past decade. The promotional products industry, like so many others, has grown significantly while maintaining a certain dependence on foreign trade, most notably with China.
With the increasing expenses of doing global trade, many promo firms are advocating for and celebrating their choice to source locally, saving themselves a lot of the headaches fellow companies are experiencing. Still, other promo firms, including some of the largest suppliers, argue that the infrastructure is not yet in place to move away from China and, therefore, global trade shouldn’t be considered taboo.
- Trump has put a 90-day pause on the global reciprocal tariffs, lowering most foreign tariffs to 10%, providing some relief to importers but exasperating the uncertainty of what trade will look like going forward.
- However, tariffs on Chinese imports have reached 145% as the two countries face off in what has become an all-out trade war. Trump has also increased tariffs applied to small parcels from China that were previously exempt under the de minimis loophole that he eliminated earlier this month.
- The Trump administration plans to use ongoing tariff negotiations to pressure U.S. trading partners to limit their dealings with China, the Wall Street Journal reported.
Below are looks at both sides of the sourcing equation. To some, local sourcing is the way forward. To others, that option is simply not realistic.
‘We Rely On Our Partners’
Naturally, promo firms who rely on sourcing domestically are better positioned to navigate the tariff turmoil.
“When I was setting up the company, it was important for me to source products as closely as possible to my consumers,” says Tara Milburn, founder and CEO of Cape Breton, Nova Scotia-based distributor Ethical Swag, which Milburn says is, in essence, an American firm south of the border and a Canadian company north of the border.
“We deal in U.S. dollars with U.S. suppliers with our U.S. clients and make it easy and transparent to find those products. We do the same on the Canadian side. As a company, we don’t deal with cross-border duties and taxes. We rely on our partners.”
Tara Milburn
Founder/CEO, Ethical Swag
Milburn says Ethical Swag truly understands its supply chain – and has the B Corporation certification to prove it. The firm built its own technological platform because the team couldn’t find any other system that would allow it to track the kinds of things it needs to be confident when speaking about the sustainability benefits of the products it offers.
- Ethical Swag’s website allows end users to filter its product selection for Canadian-made items or to source by diverse supply chains or by certified B Corps.
- The firm also has everything on file regarding country of origin and compliance documentation.
“We set those things up to empower our customers to find and buy the products that align with what they value,” Milburn says. “When I started Ethical Swag and I looked at the landscape, I made these decisions because it was good for people and the planet.”
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In addition to minimizing the impact from tariffs, local sourcing can have several benefits from both an environmental and social impact perspective, says Elizabeth Wimbush, director of sustainability and responsibility at PPAI.
“You’re reinvesting in your communities, building relationships with suppliers you trust and minimizing the carbon footprint of transport,” Wimbush says. “It’s also easier to see the positive impact your purchasing power has, including through give-back initiatives.”
Elizabeth Wimbush
Director of Sustainability & Responsibility, PPAI
Disrupt Sports, which is headquartered in Santa Monica, California, and has facilities in the United Kingdom and Australia, specializes in domestic production with one-piece minimums. Aside from potential increases in the cost of raw materials and bulk overseas production orders, the supplier doesn’t foresee much impact from tariffs.
“We work with our clients as partners on custom development, so we’ve very transparent that if tariffs get added, these will be passed on and they should let their clients know this,” says Gary Elphick, co-founder and CEO of Disrupt Sports. “When tariffs were added last time around, most clients were understanding. A lot of this comes down to communication.”
Gary Elphick
Co-founder/CEO, Disrupt Sports
Then, there’s Disrupt Sports’ sister company, M.i.A. Merchandise, a print-on-demand firm that integrates into the back end of e-commerce stores for customers in the U.S., U.K. and Australia.
- M.i.A. produces all orders in the country of purchase within three days and ships domestically to the end user.
- Elphick says he built the business around hyper-local production to reduce shipping costs, carbon footprint and the cost of warehousing.
“The discussion of ongoing tariffs is making more people look at alternative solutions for overseas fulfillment,” says Elphick, who compares the current situation to supply chain disruption during the pandemic, when companies tried to remove risks by switching to localized production.
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However, domestic production comes with a higher cost than importing from overseas. M.i.A. aims to reduce that by offering one “all in” price to get a printed item to a client rather than the traditional process that distributors go through: pay to take in bulk pallets, pay to rack and insure them, pay for warehousing, pay to pick and pack or 3PL, pack for packaging and pay for overseas shipping.
“Companies need to find a way to compete, be that on quality, speed, customization or, as in M.i.A’s case, the total cost of production,” Elphick says.
‘Some Of These Products Aren’t Available Elsewhere’
Hank Frisch, president of Ohio-based distributor Team Promotions, identifies with the notion of domestic manufacturing. His grandfather started a knitting mill in Cleveland in 1929. The factory was a place of awe and pride for a young Frisch. In the 1970s, he and his father began working for apparel manufacturer Bobbie Brooks, which had begun sourcing overseas.
In 1975, Frisch moved to Asia, spending a year and a half following sweater production in Korea, Taiwan, Hong Kong and the Philippines. He says he witnessed people native to those countries desperately trying to improve their conditions, grateful for the work.
“Let me be clear: These people did not seek us out,” Frisch says. “We came to them. American manufacturers had a bonanza with this new, vast manufacturing capacity. In turn, we helped develop economies and allowed people to build better lives through grueling, hard work. Relationships were cordial, gifts were exchanged and long social dinners helped build lasting partnerships.”
Hank Frisch
President, Team Promotions
Considering his experiences, Frisch seems to take issue with the rhetoric that these countries were exploiting the U.S. while trying to build up their own economies. As someone who can put faces to the people who have manufactured the goods, he would like them to be seen as partners.
“To assert that we were ‘ripped off’ is nonsense,” Frisch says. “The days of U.S.-made sweaters are long gone. Imposing tariffs on clothing and goods that are no longer made here only punishes us, the consumers. It makes no sense and is entirely reckless.”
Ultimately, Frisch feels trading between two countries is beneficial.
“It’s fine to renegotiate bad deals,” he says. “Tariffs and trade policy are ongoing, evolving and can be useful. When I was in Asia, the U.S. used a quota system in which countries were limited in how much of certain products they could export. But these negotiations should be conducted discreetly and respectfully.”
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Still, the tariffs facing China specifically are of the biggest concern to many promo businesses. The country has a manufacturing infrastructure that U.S. importers have been utilizing successfully for decades.
Marla Ruttenberg, chief financial officer at Spector & Co., PPAI 100’s No. 25 supplier, told PPAI Media that sourcing out of China is becoming untenable with the rising tariffs (Chinese tariffs have more than doubled since she made these comments). But, she says, alternatives aren’t necessarily a possibility.
“Oh, 100% [sourcing from China is becoming unreasonable],” Ruttenberg confirms. “There are products you’re paying 65% tariffs on. The problem is that some of these products aren’t available elsewhere. Even with these tariffs, finding a source outside of China for a better price is just not a thing.”
Marla Ruttenberg
CFO, Spector & Co.
Ruttenberg added that other countries will likely develop the ability to produce such goods and, assuming tariffs aren’t levied to those countries as well, that will provide some relief. Unfortunately, many of those countries currently have a 10% tariff placed on them, and when the 90-day pause on reciprocal tariffs ends, they may rise significantly.
- For many small businesses in promo, China was the most realistic option for sourcing.
- Depending on what products a company specializes in, or the diversity of products they offer, there may be very few alternatives to China.
‘Thoughtful Approach’
PPAI has long supported free trade.
Serving members of all political stripes, the Association recognizes the need for policies that strengthen the U.S. economy and support domestic manufacturing. However, any measures – including tariffs – must be implemented strategically to minimize short-term economic disruption while setting the stage for long-term growth.
Drew Holmgreen
President/CEO, PPAI
Abrupt cost increases impact businesses of all sizes, from small distributors to global suppliers, ultimately affecting jobs, investment and product pricing throughout our industry.
“We advocate for a thoughtful approach – one that balances economic goals with the realities of supply chain dynamics,” says Drew Holmgreen, president and CEO of PPAI. “With support from our lobbying partners in Washington, we are in ongoing conversations with industry volunteers, trade groups and policymakers with the goal to ensure that any trade policies consider the full scope of their impact and allow businesses time to adapt.”
- Every year, PPAI members and staff travel to Capitol Hill to advocate for the promotional products industry as part of PPAI’s Legislative Education and Action Day.
- Tariff concerns were one of the key issues discussed with members of Congress on April 7-8.
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
