Will Inventory Shortages Hit the Merch Market in 2025?
Gemline and SanMar executives share expert insights on promo’s 2025 stock outlook, sourcing challenges, supply chain shifts and strategies every distributor should know.
In April, the White House increased the additional tariff rate it had placed on China-made imports in 2025 to 145%. So cost-prohibitive was the levy that it triggered a widespread pullback in importing from China across industries, including in the promotional products space.
In May, President Donald Trump’s administration temporarily lowered the 145% tariff rate implemented in 2025 on Chinese products to 30%. Following the move, many promo suppliers sought again to bring products stateside from China, which remains the merch market’s top sourcing destination.
Still, the importing pause has caused fears of inventory shortages to swirl in promo. Are those concerns founded? How severe might stock gaps be and what product categories may be hardest hit? How can distributors and suppliers work together to navigate potential challenges?
In this Promo Insiders with ASI Media’s Christopher Ruvo, Tim Behling, vice president of supply chain and sustainability at Counselor Top 40 supplier Gemline (asi/56070), and Patrick Noonan, chief product officer at Counselor Top 40 supplier SanMar (asi/84863), answer those questions and much more. Both are veteran supply chain leaders, and their insights are relevant to any distributor keen to successfully overcome 2025’s challenges.
Key Takeaways
• Stock Gaps Coming: U.S.-based importers, including promo suppliers, paused importing from China when tariff rates on that nation spiked in spring 2025, causing a 30-to-45-day gap in the inventory replenishment cycle before the levies were lowered and importing resumed. Inventory shortages are expected in late Q2 to early Q3.
• Category-Specific Impact: Hard goods like drinkware and electronics (primarily sourced from China) will likely be among the categories most affected by shortfalls. On the soft goods side, value headwear and certain bags face higher risk due to their continued reliance on Chinese production.
• Risk Linked to China Sourcing Dependency: Suppliers with more geographically diversified sourcing footprints face fewer issues, but any supplier heavily reliant on China is more vulnerable to disruptions, price increases and stockouts.
• Distributor Guidance: Distributors should identify at-risk SKUs, proactively communicate with suppliers, and explore alternative products or sourcing strategies. Close collaboration with suppliers can help mitigate challenges, manage costs and secure inventory.
• Global Diversification With Strategic Continuity: Promo suppliers are diversifying sourcing away from China due to rising costs and trade pressures – yet they emphasize the importance of maintaining legacy supplier relationships where feasible.
• China’s Shrinking Role in Finished Goods: While still critical for components (like, say, zippers and fabrics), China’s prominence in finished apparel goods is declining. Vietnam’s and others’ are rising, though infrastructure and saturation pose challenges. Moving production out of China is happening on the hard goods side of the business too, but efforts aren’t as far along as with soft goods – and likewise, suppliers remain dependent on China for components even when they’ve moved production elsewhere.