Tariffs on Promotional Products. How will it affect you and your business.
As of today, President Trump has ratcheted up the trade war with China. Love it or hate it there are real world consequences for you if you are a Promotional Products distributor.
As a supplier to the promotional product industry we have a front row as to what wil happen. I think it’s important to get you looped in on this as it will affect business.
First off, what is a Tariff?
A Tariff is a TAX on American businesses and consumers on goods imported in from China. It is not a TAX on China, China does NOT pay the tariff, we/you do.
Purpose of a Tariff?
The stated purpose of a tariff is to make it so expensive to import goods from China that the demand and the COST for American made goods becomes less expensive than the cost paid for Chinese goods plus the tariff.
This all sounds good but there are some real problems with this idea. Here are a few points to consider.
We don’t make this stuff here!
The U.S.A. is currently having the BEST economy in it’s history. Think of that.
The BEST economy in it’s history!
In 2019 with it’s best economy of all-time underway a quick look at the overall domestic manufacturing sector here shows very few tech hardware companies operating (ear buds, power banks, flash drives, BT speakers etc) , there is also very few garment companies still in existence ( hats, T’s, Sweats etc) and virtually no significant plastic injection companies ( think pop sockets, water bottles, lanyards etc).
It is safe to say that 90% of what you sell will go up in price by 25%!
We will not ever make this stuff here again!
Employment in the USA is also at an all time high. Basically anyone who wants a job can have a job. As an employer getting people to work for low wages is nearly impossible, to keep them for any length of time absolutely unlikely!
The people who make this stuff in China are LOW or Minimum Wage earners!
The jobs that we are trying to take away from China are not jobs American’s want. Jobs in the Chinese manufacturing sector are the McDonald’s jobs of their culture. It is often their first job away from their home town and its a job where they stay for a year, make some money and get some skills and move on.
We own part of 3 of these factories in China and I can tell you its hard to find people to work for low wages in China. The wages required to keep the cost of the made in China product low in price for American consumers is less than 1/3 of what you would need to pay a similar person/position here in the USA.
If we were to make these products here in the USA the average wholesale cost of a promotional product will have to rise 245% to meet USA wage demands.
One solution, allow in lots of immigrants in from the southern border to work super cheap?
Given the current climate in Washington that’s not going to happen nor do I personally think its the right thing to do.
Washington could incentivize American Industry with Tax Breaks to make Pop Sockets (and other swag) here.
Another option would be for Washington to take the billions from the Tariff/Tax and give it to fledgling plastic injection molders here (and other manufacturers) and SUBSIDIZE them to get up and running/offset wages etc. That is unlikely to happen.
What can we do?
I am not a political animal so I cannot go about yelling and screaming at the screen in front of me. It will do no good. You can however contact your congressman or Senator or email the office of the Trade Representative (not sure what good it will do?). Attention: United States Trade Representative Robert E. Lighthizer [email protected]
Can you get around the Tariffs?
You probably can’t, but we can!
As a direct importer we hate having to charge the distributor a TAX that does not benefit you in any way. So we have come up with a creative solution that allows us to bring your promotional products in from China without any tariffs or duties being charged to you.
Does this interest you? It should!
Call us at 1-888-908-1481 or email [email protected]