UPDATE: President Donald Trump has followed through on his threat to raise tariffs on China to, in total, 104% since he took office in January. On Wednesday, China’s finance ministry responded by vowing to impose 84% tariffs on U.S. goods starting Thursday, April 10.
The global trade war is about to intensify as President Donald Trump has threatened to increase tariffs on China by an additional 50% unless Beijing abandons its retaliatory duties of 34% on all U.S. imports, matching the new reciprocal tariff rate Trump announced on China last week.
In a Truth Social post on Monday morning, Trump gave China until Tuesday, April 8, to cancel its plans to impose the retaliatory tariffs, which are set to take effect on April 10. Trump added that he’ll cancel all planned discussions with China unless his demand is met.
China’s action came “despite my warning” that any country retaliating against the new U.S. tariffs “will be immediately met with new and substantially higher tariffs, over and above those initially set,” Trump wrote.
- U.S. tariffs on China will total 104% if Trump’s latest threat takes effect, a White House official confirmed to CNBC.
On Friday, China announced the 34% tariffs as part of a barrage of retaliatory measures to the global reciprocal tariffs Trump unveiled last week.
- Trump has imposed a 10% tariff on all imports into the U.S., which has already gone into effect.
- Higher tariffs will be charged against roughly 60 countries that levy higher rates on the U.S., effective April 9.
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China has also suspended imports of sorghum, poultry and bonemeal from six U.S. companies, added 27 firms to lists of companies facing trade restrictions and launched an anti-monopoly investigation into DuPont China Group Co., a subsidiary of the multinational chemical giant.
- Following China’s announcement, the U.S. stock market plunged on Friday and experienced a “manic morning” on Monday.
What About Congress?
Trump’s “declaration of economic independence” represents a significant shift in U.S. trade policy and could have wide-ranging implications across markets, supply chains and sectors critical to the promotional products industry.
In the wake of the announcement, senators have introduced bipartisan legislation to grant Congress more power over instituting tariffs on other countries. The bill, co-sponsored by Sens. Maria Cantwell (D-Wash.) and Chuck Grassley (R-Iowa), would “reaffirm” the role of Congress in setting and approving trade policy.
- If passed, the Trade Review Act of 2025 would require the president to notify lawmakers of an imposition or increase in tariffs within 48 hours, explaining the reasoning and providing analysis of the impact on American businesses and consumers.
- Congress would need to pass a joint resolution of approval for the new tariffs within 60 days or the additional taxes would expire, and it would also be able to end the tariffs at any time with a resolution of disapproval.
“This bill reasserts Congress’s role over trade policy to ensure rules-based trade policies are transparent, consistent and benefit the American public,” Cantwell says. “Arbitrary tariffs, particularly on our allies, damage U.S. export opportunities and raise prices for American consumers and businesses.”
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Trump is basing the reciprocal tariff rates on how much other countries tax U.S. exports, “including currency manipulation and trade barriers,” NBC News reported. The White House told reporters those numbers were calculated by the Council of Economic Advisors, headed by Stephen Miran.
- Trump also signed an executive order closing the de minimis loophole that allows duty-free shipments of Chinese goods worth less than $800.
PPAI’s Stance
Tariffs are one of the issues that PPAI members and staff will be discussing with members of Congress, including Grassley, during PPAI’s Legislative Education and Action Day in Washington, D.C., this week.
- Items sourced into the U.S. 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.
“We’ll share the impacts our industry has seen so far and ask legislators to remember that most promo firms are small businesses and consider how these policies will affect American workers, entrepreneurs and consumers,” says Rachel Zoch, public affairs and research editor for PPAI.
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.”
Tariffs Are Determined By Country Of Origin
A tariff applies to an import based on the country that the goods were made in or originated from. The reason for the tariff is typically to have some sort of negative impact on that country of origin in trade wars or negotiations.
- At a time when the U.S. is applying tariffs to a potentially unprecedented number of countries, it’s important that distributors have conversations with their supplier partners to achieve clarity and avoid assumptions.
- For example, in the case of Montreal-based Spector & Co., PPAI 100’s No. 25 supplier, a significant amount of the products is sourced from China, which is a different tariff conversation than the one involving Canadian tariffs.
- There is “a very small subsection” of Spector products manufactured in Canada, and there is also a small duty placed on Canadian labor that the company is able to absorb.
“There’s no difference between dealing with us versus dealing with anyone in the U.S.,” says Marla Ruttenberg, Spector’s chief financial officer, as a message to distributors needing to bring product to the U.S.
Marla Ruttenberg
CFO, Spector & Co.
To clarify further, Spector is still paying tariffs on their Chinese imports before bringing them into the U.S. With so much of promo (and most industries) reliant on China, this is an issue faced by many U.S. suppliers as well. There is no second set of tariffs applied to Spector for getting the products over the U.S. border.
“It’s going into the U.S. as duty paid,” says Ruttenberg. “We’re paying the duty when they come in, not when they go out.”
- This is also the case with imports for companies based in Mexico or any other country. It is a crucial point of understanding that a company being based in a certain country does not guarantee that its products are also manufactured in that country, as most U.S. suppliers will tell you.
This has been a point of emphasis also made by PPAI Board Chair Denise Taschereau, CEO and co-founder of Vancouver-based distributor Fairware, who warns against knee-jerk reactions, particularly, members abandoning companies that operate in Mexico and Canada.
Denise Taschereau
PPAI Board Chair
“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.”
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
