The long-promised global reciprocal tariffs are scheduled to be announced on Wednesday, April 2, which President Donald Trump has declared “Liberation Day.”
But business leaders throughout the promotional products industry and beyond are wishing it’s merely an April Fools’ prank.
Although what exactly the reciprocal tariffs will entail hasn’t been disclosed yet, they’re generally designed to match the import duties placed on U.S. goods and services by other nations, according to the Yale Budget Lab, a non-partisan public policy think tank.
There’s been mixed messaging ahead of the official announcement. Last week, The Wall Street Journal reported that instead of revealing a list of industry-specific tariffs, the Trump administration will likely apply reciprocal levies on a targeted set of nations that account for the bulk of foreign trade with the U.S.
- U.S. Treasury Secretary Scott Bessent said the tariffs will target the 15% of nations that have trade imbalances with the U.S., which may include the European Union, Vietnam, Taiwan, Japan, South Korea and India, among others.
- However, on Sunday, Trump said that reciprocal tariffs will include all nations, not just countries with the biggest trade imbalances, NBC News reported.
Reciprocal tariffs are bound to escalate the global trade war, which has already seen countries retaliate with their own tariffs on U.S. imports.
ICYMI: 5 Tips For Overcoming Customer Objections Amid Tariffs
Items sourced into the U.S. in which the country of origin has tariffs imposed on it 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.
Ben Zhang
President/CEO, Greater Pacific
“The idea of reciprocal tariffs could lead to a tit-for-tat escalation that further complicates trade dynamics,” says Ben Zhang, president and CEO of Greater Pacific, PPAI 100’s No. 68 supplier, which sources roughly 70% of its products from China.
“This approach may exacerbate existing tensions and create an unpredictable environment for businesses,” says Zhang, who recently told PPAI Media his secret weapon for solving tariff troubles.
Push For Made-In-America
While China, Mexico and Canada will likely be in the crosshairs of the reciprocal tariffs, they’re each already facing tariffs imposed by Trump.
Additional tariffs on all Chinese imports have risen 20% this year, which Beijing responded to by targeting U.S. imports, such as coal, liquefied natural gas and agricultural products, with up to 15% duties.
- Also on April 2, exemptions on 25% tariffs on imports from Mexico and Canada are set to expire.
- Plus, a 25% tariff will be applied to all imports from any country that continues to purchase Venezuelan oil after April 2, which could affect U.S. promo firms who do business with companies in India.
- On April 3, 25% tariffs on imported cars and key auto parts will go into effect.
- In March, 25% tariffs on steel and aluminum imports from all countries went into effect.
Trump has been leveraging tariffs to boost American manufacturing – an initiative that he championed during his first term. The goal of the tariffs is to increase prices on imports to the point where it’s economically favorable for companies to relocate their manufacturing to the U.S., says Colin Grabow, associate director of the Herbert A. Stiefel Center for trade policy studies at the Cato Institute.
“If prices don’t go up, it doesn’t deter imports, and therefore there is no reason to set up shop in the U.S.,” Grabow told CBS MoneyWatch. “Part of the logic is premised on prices going up, otherwise they are not going to accomplish their goal.”
RELATED: Tariff Turmoil: How Promo Is Managing Stress And Uncertainty
In connection with tariff implementation, the U.S. Small Business Administration recently announced its Made in America Manufacturing Initiative, in which the agency has pledged to cut $100 billion in regulations through the Office of Advocacy and seek to expand financing options for small businesses.
Data indicates that Trump’s “Made-in-USA” push is seeing early success, as the country gained 10,000 manufacturing jobs during his first full month in office in February after losing an average of 9,000 manufacturing jobs per month last year.
- Furthermore, nearly half (46%) of PPAI 100 suppliers and distributors plan to focus on domestic sourcing this year, according to PPAI Research.
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.
RELATED: ‘A Partner As Committed As We Are:’ 2 Suppliers Divided By Only The 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.”
‘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. 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 as part of PPAI’s Legislative Education and Action Day.
- Tariff concerns will be one of the key issues we’ll 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.
