By Dean Schwartz (SWAG Master): There has been a lot of talk about China tariffs in the news lately, and there is no shortage of opinion on what this means for the economy at large. Regardless of your political affiliation, it is safe to say that tariffs on billions of dollars of imported Chinese products will have a significant impact on the promotional products industry in 2019. But what exactly are the China tariffs?
China Tariffs Explained
A tax or duty to be paid on a particular class of imports or exports is a tariff. On September 17, 2018, the U.S. Trade Representative announced that the United States would be imposing tariffs on roughly $200 billion worth of Chinese imports. There has been back-and-forth on which products will be subject to the tariff, and you can find the full list here. Included are certain types of fabrics, plastics, and electronics, which are the raw materials for many popular promotional products.
On September 24, 2018, a 10% tariff took effect and this rate will rise to 25% on January 1, 2019. The delayed rate increase is intended to give time for companies to shift supply chains. But in the short run, the tariffs will add to the cost of doing business for suppliers and distributors of the affected products. Executives from both suppliers and distributors are coming to terms with this reality and they are busy implementing mitigation efforts. However, consumers are likely to see price increases because there is only so much companies can absorb.
So what now? Understand the broad effects of these tariffs can be overwhelming. But here are 3 big takeaways for what you can expect when it comes to your promotional needs.
3 Takeaways on the China Tariffs
1. Promo products industry will be affected – As mentioned above, the promotional products sector will be impacted by these tariffs in 2019. Much of the industry’s supply chain model is rooted in Chinese factories producing a majority of the products suppliers and distributors imprint and sell in the U.S. These tariffs will disrupt this supply chain model, which leads to our next takeaway, uncertainty.
2. Uncertainty can create challenges – Generally speaking, uncertainty is not good for markets. And while companies know these tariffs are coming, it is still difficult to predict the wide-ranging effect they will have on the marketplace. Companies are doing their best to mitigate these changes, but the unknown will certainly create challenges.
3. Buy now! – So much of this tariff issue is out of anyone’s hands. We are all subject to ongoing geopolitical events whether beneficial or not. But if you are responsible for promo product purchases, there is something you can do. You can buy now! Because future prices are uncertain, placing your order before year end can help minimize your risk.
Remember that SOBO will still be able to create and process many orders in the U.S., and we are committed to meeting all our clients’ needs. Give SOBO a call at 888.752.0432 or email firstname.lastname@example.org to place your order today.