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Reports: Trump Could Rollback China Tariffs

It’s possible that levies that affect some items the promo products industry sells could be lifted, sources have indicated.

President Donald Trump’s administration is considering dialing back at least some tariffs on Chinese imports in an effort to seal a preliminary trade deal with China, according to sources cited by The Wall Street Journal.

The report gained further credence on Thursday when China’s Commerce Ministry stated that the two nations have agreed to lift existing trade tariffs that they have placed on each other. A timeframe wasn’t immediately known, but Gao Feng, a spokesperson for China’s Commerce Ministry, said both sides expect to simultaneously cancel some existing tariffs.

That’s potentially good news for the United States’ promotional products industry, which imports the vast majority of products it sells stateside from Chinese manufacturers.

In particular, The Financial Times reported that the White House was looking at rolling back the 15% levies that the U.S. imposed on $112 billion in China-made goods on Sept. 1. Writing instruments and a spectrum of apparel products – including T-shirts, the single-largest product category in terms of sales in the promo industry – are among the items affected by that batch of tariffs. It’s also possible the Trump team could consider lowering the 25% duty on about $250 billion in other Chinese products, which include promo categories like bags, stationery, select drinkware, and tech and accessory items, according to Bloomberg Media.

“The US willingness to meet a longstanding demand for tariff relief from the Chinese comes as officials from the world’s two largest economies worked out the terms of a ceasefire to be signed in the coming weeks” by Trump and Chinese President Xi Jinping, The Financial Times said. “It suggests that both the U.S. and China are hoping to craft a more ambitious and possible longer-lasting truce as early as this month than would have been the case in the absence of a tariff removal.”

It’s likely, sources suggested, that any deal would also result in the U.S. refraining from moving forward with its plan to impose additional tariffs of 15% on another $190 billion or so in Chinese imports in December. Currently, the U.S. has duties on more than $360 billion in Chinese imports. If they remained in place and the Trump administration imposed the additional tariffs in December, then virtually everything the U.S. imports from China would be subject to duties.

In recent weeks, however, Trump has touted that the U.S. and China are close to signing a “Phase One” trade deal. Reports have indicated that the deal could feature certain wins for the U.S. side, including China committing to buying American agricultural products, agreeing to regulations on currency manipulation, opening up Chinese industries to U.S. firms, and enacting measures to protect the intellectual property of foreign companies, including U.S. ones, that do business in China. But in exchange for such things, Beijing wants the U.S. to back off on at least some tariffs.

Talk of tariff rollbacks and reported progress toward a trade deal has stirred hope among some promotional product industry executives that relations between the world’s two largest national economies will stabilize after a year-and-a-half-long trade war, which has caused repercussions for the promo market. Still, executives told Counselor that it remains too soon to get excited, as past reports of progress were followed by escalations in tensions. In the spring, a reported near trade deal fell apart at the 11th hour, and Trump raised tariffs, with China hitting back with levies on U.S. products.

“Certainly, the news that the Trump administration may roll back some of the existing tariffs is very positive. However, we have watched this movie before, and thus far, it hasn’t ended well,” Eddie Blau, CEO of Top 40 supplier Innovation Line (asi/62660), told Counselor. “I’m somewhat optimistic, however. … It makes sense that Trump needs to declare a win now before the election season.”

“As we’ve seen through the first few rounds of this trade war, we must expect the unexpected,” Chris Anderson, CEO of Top 40 supplier HUB Promotional Group (asi/61966), told Counselor recently. “As such, unless a broad-based compromise is reached, businesses will continue to employ defensive strategies – which, in the aggregate, becomes a drag on economic growth and further undermines confidence in the global economy.”

Jamie Stone, president of Seattle-based distributor Gifts By Design (asi/205947), has told Counselor: “Our industry’s suppliers need to know what their products will cost landed and delivered to their facilities, so until the trade war is settled and finalized, it will continue to wreak havoc on our industry, especially as it impacts large overseas custom import orders, where the prices may change from order placement to delivery, based on the tariffs.”

As a result of the trade war, the domestic promo industry has faced issues that include increased product prices, destabilized annual pricing, challenges in producing catalogs and an ever more uncertain selling environment that some fear could cause end-buyers to reduce their spending on ad specialties. The trade conflict has also made longer-term planning more difficult for some suppliers and caused suppliers (and certain distributors that source direct from abroad) increasingly to look beyond China to produce products. As the search for new sourcing destinations accelerates, some industry leaders worry that more product safety and social responsibility issues will arise.