Navigating the Impact of New Tariffs on the Promotional Products Industry
On Wednesday, April 2nd, 2025
The promotional products industry, along with numerous other sectors in the United States, was significantly impacted by the Trump administration’s announcement of sweeping new tariffs affecting nearly all U.S. trading partners. The impact on the promotional products industry is particularly severe due to its dependence on China and other Southeast Asian countries, all of which are facing substantial tariff increases.
To put the significance of these changes into perspective, consider the following:
• The cost of U.S. tariffs on imported goods is set to rise from $78 billion to $792 billion annually.
• The average tariff rate for goods imported into the U.S. across all categories and countries will increase to 24%, up from 2% prior to Wednesday’s announcement.
• Specific tariff increases for key manufacturing regions within the promotional products sector are as follows: China (11% to 63%), Vietnam (4% to 48%), India (2% to 23%), Cambodia (7% to 55%), and Indonesia (5% to 35%).
• Shares of publicly traded retail and consumer goods companies took a significant hit on Thursday, as they face similar supply chain disruptions. Notable declines included Nike (down 14%), Gap (down 20%), Apple (down 9%), and Restoration Hardware (down 40%)
What is particularly striking about the tariff announcement is the scope and scale of the newly imposed measures. For many promotional product suppliers who have spent the past decade diversifying their supply chains beyond China, this is a devastating setback, leaving few viable alternatives. Moreover, the severity of these tariffs will likely push prices for many product categories well beyond the budgets of many end clients.
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So, where do we go from here? The industry has faced similar challenges before, such as with the 2018 China tariffs and the market disruptions caused by the 2020 COVID-19 crisis. In both instances, we demonstrated resilience and adaptability. The lessons learned from those periods will be even more critical now:
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• Communicate transparently and frequently with clients and customers. Share information openly and honestly, and begin the conversation now.
• Remain flexible and adaptable. Expect pricing changes, supply chain disruptions, and shifts in product demand. Strong relationships with suppliers will be essential.
• Prepare your business for what lies ahead as the global landscape adjusts to these new realities. Financial resilience and discipline will be vital, and contingency plans should be in place to address potential prolonged market slowdowns.
• Explore new ways to add value for your clients. Innovating with new services, products, and creative solutions will offer opportunities to stand out in a price-sensitive market.
While there may be adjustments to tariff rates and affected countries in the short term, it is clear that the industry will need to navigate this new environment for the foreseeable future. Adaptation is key, and those who embrace this challenge head-on will be best positioned for success. We have faced adversity before as an industry, and we will do so again.
- David Nicholson, Coach/Consultant, Exec To Coach