Key Tariff Takeaways: What to Know for 2019


Transparency is very important to us at Boundless and something we constantly strive to imbue in all our business practices.  Honesty and integrity are built into our company core values and are a personal mission of mine as well.  In my mind, the impact that we have as a business is a direct reflection of who we are as individuals.  One of our core values at Boundless is to “do the right thing”, and there is no question that building a transparent business and supply chain is the right thing to do.  In light of this, I felt it was important to share our thoughts on the recently imposed import tariffs and answer some key questions that folks are asking us.

The issue is complex in nature, but the quick summary is that friction between China and the United States has resulted in tariffs imposed by both sides on a slew of different products and materials.  In the wake of these tariffs it is important to understand the impact on your business and to plan ahead.  Tariffs are expected to directly impact the promotional products industry, and by extension, buyers of branded products as well.  So, in the spirit of transparency, we think it is important to proactively reach out and open the lines of communication with our buyers.  Boundless has worked closely with our preferred suppliers and industry associations to prepare for what’s next and to keep you informed.  And while no one has all the answers on the ripple effect of these tariffs, I wanted to address a few key questions-

When will the tariffs go into effect?

Tariffs on roughly $200 billion in Chinese imports were authorized by the United States and went into effect on September 24.  Tariffs are currently set at 5-10 percent through the end of the year and will rise to 25 percent and affect approximately $267 billion in imports on January 1, 2019 (PPAI).  Since most of our supplier partners sit on significant amounts of inventory they have not increased prices yet, but in most cases you can expect pricing to begin being impacted starting in January.

What products will be impacted?

The current full list (here) is pretty extensive, but in general after more tariffs roll out in 2019 most products imported from China will be impacted.  As it stands now in our industry several common products are expected to experience price increases including larger categories like headwear, bags, wood products, cork and paper which will affect items like: lip balms/sunscreen/hand sanitizer, plastic drinkware lids, coolers, notebooks/portfolios, hats, tools/key chains, power banks. charging cables, folding chairs, and more.

How will this affect your marketing budget?

The impact on your budget will vary, but it is safe to say that most companies that purchase promotional products as part of their marketing mix will be affected.  Price, product selection, inventory and lead times may be affected due to tariffs in comparison to similar orders you have may have placed in the past.  You may need to find similar products manufactured in other countries or plan for price increases in your 2019 budget.

What are your options as promotional product buyers?

The possibility of tariffs on Chinese goods has been a situation that many of our vendors were prepared for and we are working with them to source alternatives to keep costs for our customers down.  We anticipate the demand for USA made products to increase, and in some product categories similar alternatives from other countries like Cambodia, Vietnam, Bangladesh, and Mexico can be found and be competitively priced.  That being said, the supply chain infrastructure within China is massive and very well established, and it will take many years, even decades, to replicate elsewhere.  As a comparison, Chinese factories tend to have a 45-60 day lead time compared to the 90-120 days with other Asian manufacturing markets.  If budget is the most important factor, then promotional product buyers will need to keep these increased lead times in mind and be more proactive in their planning.

Along with working with your Boundless account managers to find alternative products, there are some more options to help alleviate tariff costs.  If you have any annual large repeat orders, you can order now and make sure your order delivers before Jan 1st to avoid price increases.  Additionally, you may need to be more strategic with your promo spend and budget.  I encourage you to work closely with your account manager to proactively find solutions that work for your organization.

Why promotional products still should be part of your marketing mix.

Before you consider switching marketing dollars to other forms of advertising, keep in mind that even with the tariffs, promotional products are still one of the most cost-effective ways to make an impression on your target audience.  Promotional products are also extremely effective in the digital age and according to a study by ASI boast an 85% brand recall rate (which is higher than any other advertising medium).  Partnering with a creative and solution-oriented distributor is key to navigating these waters. We can help you ideate and make sure your promotional spend makes an impact and moves the needle on engagement and exposure to your brand.

cost of promo

Bottom line, nobody knows for certain how long the tariffs will be in place, or what products will ultimately be impacted.  What we do know is that we are now operating in a much less predictable global trade environment, and as such it’s more important than ever to work with a capable promotional product partner.  A partner that can secure their supply chain, and proactively strive to protect their clients from unpleasant price increases or other surprises to the largest extent possible.

Henrik Johansson

Have more questions or want to talk to a solution-oriented team about tariffs? Contact us!

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