The tariff roller coaster continues as President Donald Trump has issued temporary tariff exemptions for roughly half of the U.S.’s imports from Mexico and a little more than one-third of imports from Canada.
- On March 4, Trump issued 25% tariffs on both Mexico and Canada, beginning a trade war that has led to retaliatory tariffs from the north and south of the United States.
The exemptions will apply to products that comply with the rules of origin under the U.S.-Canada-Mexico Agreement (USMCA) until April 2, 2025. Those rules require that a product be made entirely in North America or be substantially transformed in North America if it’s made of components from other countries.
Trump’s tariffs will still apply to about 50% of Mexican imports and more than 60% of Canadian imports, CNBC reported.
- 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.
While Canadian Prime Minister Justin Trudeau announced that a $155 billion retaliatory tariff package, which had been delayed due to a 30-day pause beginning in February, would be reinstated, Mexican President Claudia Sheinbaum announced that Mexico would impose retaliatory taxes on U.S. goods, but didn’t give specifics.
“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.”
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.
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St. Peter was only two days off.
“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.”
Promo’s Response
If tariffs remain implemented, 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.
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“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.
Denise Taschereau
PPAI Board Chair
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.”
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. Abrupt cost increases impact businesses of all sizes, from small distributors to global suppliers, ultimately affecting jobs, investment and product pricing throughout our industry.
Drew Holmgreen
President/CEO, PPAI
“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, and tariff concerns will be one of the key issues we will be discussing with members of Congress on April 7-8. (Learn more about LEAD here.)
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
