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News February 28, 2025

What the Heck Is Going On With Tariffs?

When it comes to tariff threats, every day seems to bring another twist from the White House. Here’s a look at where things stand on levies and how they may impact promo.

By  Christopher Ruvo

Key Takeaways

• China Tariffs: President Trump has increased tariffs, with a 10% hike on China-made goods in February and potential for another 10% hike next week.

• Promo Pricing: The China tariff increases, and others that may come into play, are expected to raise prices for promotional products.

• Canada/Mexico Tariffs: The president has said tariffs of 25% on America’s neighbors are poised to take effect March 4 but uncertainty continues. There are likely impacts for promo and economies in all three North American countries.

• 25% Steel & Aluminum Levies: These are scheduled to take effect March 12 and there’s a chance they’ll drive up prices on products that contain the metals, like drinkware.

• Reciprocal Tariffs: An announcement on Trump’s so-called “tit-for-tat” tariffs on nations around the globe is expected April 2, but Washington insiders have said implementation is probably months away.

President Trump has been nothing if not busy.

Since entering the White House for a second term a little over a month ago, the United States’ 47th president has issued a flurry of directives and pledges on trade policy, with a concerted push to ratchet up import tariffs at the center of the actions. The tariff plans, if enacted, could have significant implications for the promotional products industry.

 

With that in mind, here’s a breakdown of where things stand as of the morning of Feb. 28 on tariffs. As one industry executive notes, it’s been a fluid situation, with timelines and proposed actions changing quickly. This primer aims to help orient the merch industry.

China Tariffs & Potential New Shipping Fee Charges

In early February, Trump placed an additional tariff of 10% on China-made goods. This was on top of tariffs he’d slapped on imports from that nation during his first term. On February 27, Trump threatened to top up the tariffs again, adding another 10% levy rate to what’s already on the books come March 4.

The first 10% jump this year already had promotional products suppliers saying that price increases were probably likely. Promo imports the vast majority of products it sells domestically, especially from China. With another 10% tariff hike, prices increases are probably a given.

“The tariff outlook is changing every day – no one can keep up,” said Trevor Gnesin, CEO of Counselor Top 40 supplier Logomark (asi/67866) and a member of Counselor’s Power 50 list of promo’s most influential people. “For sure, the cost of these China tariffs are going to be passed on [by suppliers to distributors] by midyear.”

Power 50 member Chris Anderson, CEO of Counselor Top 40 supplier HPG (asi/61966), shared a breakdown of what China tariff impacts could look like given Trump’s latest threat, saying that depending on how things play out, effective tariff rates could be 27.5% to 70% on China-made imports.

“The tariff outlook is changing every day — no one can keep up.” Trevor Gnesin, Logomark (asi/67866)

“In the face of 2025’s sizable tariff increases,” Anderson said, “our first look is at how we can flex, shift and adapt to reduce or eliminate the pricing impact of import tariffs. However, in the case of goods that are set to be tariffed as much as 70%, there will undoubtedly be market disruption and price increases – in the promotional products industry, and throughout the entire economy.”

Power 50 member Frank Carpenito, president/CEO of Counselor Top 40 supplier Gemline (asi/56070), told ASI Media that suppliers “without question” will be forced to increase pricing due to China tariffs and other levies (discussed below) slated to come into effect.

“Despite all of the efforts that suppliers take to minimize price increases, at these levels, it will be almost impossible for suppliers to fully absorb them,” Carpenito said. “We suspect that we will continue to see additional tariffs levied on additional countries across the globe, which would likely drive further price increases throughout 2025.”

Some suppliers, including HPG, have said that there’s not an immediate need for price jumps because inventory they have stocked was imported prior to the tariff escalation earlier this month – and other threatened tariffs haven’t yet taken effect. “There is no immediate pressure on pricing, but the fuse is lit,” Anderson told ASI Media.

Should the tariffs on China come into force as Trump has asserted, suppliers could look to further accelerate efforts to produce product in factories outside China. Some Chinese manufacturers are already anticipating this, rushing to establish factories they own/control outside their nations’ borders. It’s an undertaking though – for the manufacturers and for promo suppliers.

“Once tactical options have been exhausted,” said Anderson, “strategic moves are then considered, such as global supply chain shifts and tariff-optimized new product development. These are more time-consuming and often-times capital intensive moves that are made to rebuild entire systems around entrenched tariffs.”

And it’s not just tariffs that could make importing to the U.S. more expensive.

The Trump administration is considering imposing million-dollar fees on Chinese shipping companies and ocean transport companies based in other nations that use China-built cargo ships – a move that, if enacted, could send shipping and freight costs soaring and potentially drive up prices on a host of imported goods, including promotional products.

The Office of the United States Trade Representative announced the proposal on Feb. 21 and is inviting public comment through March 24.

“The surcharge on container ships coming from China will increase freight costs as well,” Gnesin said.

China is planning to hit back if Trump proceeds with his plans on tariffs. “If the U.S. insists on its own way, China will take all necessary countermeasures to defend its legitimate rights and interests,” a China Ministry of Commerce spokesperson said in a statement.

Canada & Mexico Tariffs

China, Canada and Mexico are the United States' three top trading partners. Trump has pledged to implement tariffs of 25% on Canadian and Mexican imports to the U.S., as well as a 10% levy on Canadian energy products like crude oil, by March 4. Canada has lined up retaliatory tariffs and Mexico has pledged countermeasures should Trump proceed with his plan.  

“If on Tuesday there are unjustified tariffs brought in on Canada, we will have an immediate and very strong response, as Canadians expect,” said Canadian Prime Minster Justin Trudeau.

Mexican and Canadian government officials have been in Washington, D.C. for talks aimed at preventing the tariffs taking effect. It’s been a roller-coaster week.

Trump on Monday appeared to indicate that the Canada/Mexico tariffs were definitely going forward. Then, on Wednesday, he seemed to indicate they could be suspended until April 2. On Thursday he again vowed the levies would take effect March 4 – the date he had previously suspended them to in early February. As of this writing, it’s a coin flip on whether the levies will go into effect Tuesday, given how direction has changed rapidly.

Such confusion on duties “is creating more uncertainty about the economy and that has an even bigger effect on business than tariffs,” Gnesin said.

Trump’s stated reason for wanting to enact the Canada/Mexico tariffs has been, in part, to compel Canadian and Mexican authorities to intensify efforts to combat illicit drugs and illegal migrants from entering the U.S. Both nations have pledged to improve border security and are reportedly already taking action.

“If on Tuesday there are unjustified tariffs brought in on Canada, we will have an immediate and very strong response, as Canadians expect.” Justin Trudeau, Canadian Prime Minister

An enactment of 25% tariffs on Mexican and Canadian imports would likely impact the promotional products industry by complicating merch commerce between the U.S. and those nations, and almost certainly stoking price increases on products brought stateside from America’s neighbors.

The consequence could potentially be more dire for the promo industries – and the economies broadly – in Canada and Mexico.

“If the tariffs remain in force for an extended period of time, we will see Canadian companies cut back on discretionary spending, reduce headcount and ultimately many businesses will cease operations,” said Danny Braunstein, the Winnipeg-based director of client success for Counselor Top 40 distributor BAMKO (asi/131431) in Canada. “This will trickle down to all Canadian businesses, including promotional products distributors and suppliers. It is difficult to prepare for this scenario with so many unknowns.”

Some distributors are already seeing impacts.

“We’ve observed a shift in client behavior: Customers who typically place project-/campaign-based orders in Q1 are delaying decisions until there is more clarity on the tariffs,” shared Sam Singh, president and CEO of Full Line Specialties (asi/199688) in Surrey, BC. “A potential risk of this ‘wait-and-see’ approach is that clients may reconsider their promotional merchandise budgets altogether. If they forgo branded merchandise for a Q1 trade show or new product launch and see no significant impact on booth traffic, they may deprioritize branded merch in the future.”

Singh worries a tariff war among the three North American countries will lead to increased costs, supply chain disruptions and pricing uncertainties for Canadian promo firms.

“We’ve observed a shift in client behavior: Customers who typically place project-/campaign-based orders in Q1 are delaying decisions until there is more clarity on the tariffs.” Sam Singh, Full Line Specialties (asi/199688)

Still, there could be repercussions for U.S. promo companies too beyond just higher costs to import products that may originate in Canada or Mexico. Domestic industries, such as automotive, that may be hurt by import tariffs could reduce promo spend, for instance. Also, some Canadian distributors said they will send less business to U.S.-based suppliers, opting for domestic options or China-based providers.

“If U.S. factories increased their prices because they are impacted with additional tariffs, we will buy more from China,” said Christine Courtemanche, vice president of Linéaire Infographie inc. (asi/253727) in Laval, QC.

Some suppliers with operations in Mexico and Canada don’t necessarily see huge impacts to their operations or costs should the U.S. go forward on tariffs.

“We don’t expect these tariffs to affect many of our products directly,” said Samantha Kates, president of Saint-Laurent, QC-based Counselor Top 40 supplier Spector & Co. (asi/88660). “And if there are any challenges, we’re confident we can work through them with little to no impact on our customers.”

Stellar Lanyards (asi/89682) is a Mexico-headquartered supplier with over a decade of experience importing products across the border. The firm offers dye sublimation textile manufacturing and specializes in lanyards, wristbands, hats and drawstring bags.

Company President Anthony St. Peter told ASI Media that if tariffs were enacted and included textiles, the impact on Stellar Lanyards would still be minimal.

“We have strategies in place for shipping into the U.S. from Mexico that position us advantageously,” he said. “As a result, the tariffs would only slightly increase our costs by a few cents on most products. We do not anticipate this affecting our customers, as we would still be able to remain competitive, offering our products at the current market rate.”

He acknowledged though: “Higher import costs on everyday goods could drive inflation, reducing purchasing power and leading companies to cut budgets for promotional products.”

Legal challenges could follow if Trump moves forward with the Canada/Mexico tariffs. Even so, a court battle would likely be protracted. The tariffs could remain in effect while things play out, barring an injunction from a federal judge.

Steel & Aluminum Tariffs

On Feb. 10, Trump signed a proclamation that establishes flat rate tariffs of 25% on steel and aluminum imports — a move some promotional products suppliers believe will compel higher prices on merch items that contain the metals, including the highly popular drinkware category.

As of this writing, the heightened aluminum and steel tariffs are set to take effect March 12.

Aimed at safeguarding and strengthening the domestic steel industry, something Trump reportedly views as essential for national security, the levies apply to millions of tons of steel and aluminum imports coming from any country, including the likes of Canada, Mexico, Brazil and South Korea, that had previously been operating under exemptions that allowed them to export the metals to the United States duty-free.

The 25% steel rate had been in place for countries not granted exemptions; Trump’s Feb. 10 move raised his 2018 aluminum tariffs from 10% to 25%.

Jing Rong, HPG’s vice president of supply chain and sustainability, noted that the Harmonized Tariff Schedule released for steel and aluminum would apply the new levies to steel and aluminum derivatives (household) items. That means promo items like drinkware – the second bestselling category in the promotional products space – would probably be saddled with the additional 25% tariff burden, Rong and others opined.

“Supplier costs will increase,” Rong told ASI Media.

Reciprocal Tariffs

On Feb. 13, Trump signed a memorandum that directs the Commerce Department and U.S. Trade Representative to study how U.S. tariff rates could be adjusted to match current levies and trade barriers that other countries place on American exports to those nations.

Trump wants his administration to go nation by nation and propose tariffs that would effectively serve as countermeasures to levies/economic barriers each country puts on the U.S. 

On Feb. 20, the Office of the United States Trade Representative (USTR) opened a public comment period on the proposed reciprocal tariffs. It runs through March 11.

“The prospect of country-specific tariffs creates significant logistical and supply chain issues for U.S. importers that source from around the globe,” wrote attorneys for global law firm DLA Piper in an analysis. “Moreover, the imposition of new tariffs is likely to prompt varying retaliatory measures from trading partners. This would create an intricate web of border measures that both complicate the cross-border shipment of goods and would carry significant and varied cost implications for global supply chains.”

Trump has indicated that April 2 is when there’ll be an announcement on reciprocal tariffs, along with word on the completion of trade policy reviews he ordered on Inauguration Day and more on threatened 25% tariffs on automobiles, pharmaceuticals and semiconductors.

Still, as it pertains to the reciprocal tariffs, media outlets like The Wall Street Journal reported that sources have indicated it will take longer than April 2 to implement the envisioned levies, maybe six months or more. On April 2, an unnamed Washington insider told the Journal, there will be a report that outlines “equivalent tariff” rates for other nations and “mechanics for how they would be implemented.” 

According to the Journal: “While there will likely be a reciprocal announcement on April 2, that time frame is simply too small to fully analyze the tariffs and nontrade barriers of all those nations.”

Some Trump political allies and corporate leaders think it unlikely the president will follow through on all the tariff pledges.

“The aperture is pretty broad here,” Sen. Thom Tillis, a member of the Finance Committee, said of the tariff announcements. “I do think that over time, if history is a guide, it’s got to narrow a bit.”

Certainly many in promo hope that’s the case.

Speaking about the Mexico/Canada tariffs in particular, Kates said: “It’s a fluid situation, but we expect ongoing negotiations. No matter what happens, we’re prepared to navigate it and keep delivering for our customers. We’re as prepared as we can be for whatever comes our way.”