No Weak Links

After a year of tariffs and a months-long war in the Middle East that has disrupted the global supply chain, it would’ve been easy to get discouraged. But suppliers in the promotional products industry aren’t the quitting type.

“Those of us that have been doing this for a long time, we just keep facing these challenges over and over again,” says Joel Freet, CEO of Counselor Top 40 supplier Cutter & Buck (asi/47965). “You just have to keep focusing on making your business better every day.”

But Freet doesn’t want to downplay it: There have been plenty of challenges suppliers like Cutter & Buck have faced this year. In particular, the ever-changing nature of President Trump’s tariff agenda has caused many companies to re-evaluate their sourcing strategy.

Country diversification has been the key piece of the sourcing puzzle. The promo industry over the decades had become overwhelmingly reliant on Chinese imports – which made Trump’s first-term tariffs nearly a decade ago a much-needed wake-up call to diversify. That lesson was reinforced last year, when Trump’s second-term tariffs went into effect and levies on Chinese goods skyrocketed to as high as 145%, which sent suppliers scrambling to alternative sourcing hubs such as Vietnam and Bangladesh. However, as tariff rates on many countries have shifted repeatedly amid negotiations, court challenges and policy reversals, suppliers have struggled to determine whether those sourcing destinations will remain cost-effective long term.

“Over the previous three years, we’ve more aggressively tried to find alternative sources outside China,” says Jing Rong, VP of global supply chain and sustainability at Counselor Top 40 supplier HPG (asi/61966). “Now we’re in a holding pattern until we have a clearer picture of what the tariffs look like.”

Counselor Top 40 supplier Edwards Garment (asi/51752), meanwhile, has been actively decreasing its reliance on China for more than a decade. According to its president/CEO and Counselor Power 50 member Jose Gomez, the company had to pivot slightly when tariffs took effect, but remained committed to its long-term sourcing strategy.

“We made some early moves – and by early I mean 2010, 2015,” he explains. “We started making these moves even before the pandemic because we saw this global approach to sourcing as a long-term trend. That’s allowed us to work through the tariffs.”

Despite a Supreme Court decision that ruled Trump’s use of reciprocal tariffs unconstitutional, the president continues to find new justifications for enacting levies on imported goods. Rong says the court’s ruling puts many countries (including China) on a level playing field when it comes to tariffs, but that HPG’s larger sourcing strategy will depend on what tariffs are imposed moving forward.

Daniel Riesenburg, branch manager at TecEx (asi/93212), a firm that helps companies effectively import and export goods across 180 countries, advises against taking a reactive approach to tariffs. “You need to look at everything holistically,” he says. “If you move manufacturing into the U.S., that might cut tariffs, but it will increase other costs, like labor.”

Menachem Wolf, who heads up TecEx’s promotional products practice, adds that, “when you shift your sourcing, you’re likely going to be working with people you’ve never dealt with before. They don’t know your timelines or your relationships. You ultimately need to think about how to produce the same output as you did before.”

While Gomez says Edwards Garment only shifted about 12%-15% of its sourcing post-tariffs, the supplier did so strategically, transitioning from one “known, mature vendor” to another. It would’ve been much harder, he acknowledges, to have had to work with an unknown vendor in a new location.

“We had already done a lot of homework about establishing vendors in other places, which helped with continuity and quality,” he says.

By prioritizing sustainability, Cutter & Buck (which manufactures goods internationally but decorates and finishes them domestically) has been able to stem some of the larger supply chain challenges. When fuel prices skyrocketed during the closure of the Strait of Hormuz due to the war in Iran, Cutter & Buck was already cutting down its energy usage by minimizing transportation and creating products using fewer resources.

Freet knows that this focus on efficiency often means goods are transported slower than they might be otherwise. In fact, Cutter & Buck has a policy that prohibits the use of air freight for transporting goods due to its environmental impact. But Freet takes inventory levels seriously, which comes in handy if delays happen.

“We never want to be in a position where we’re desperate for inventory. And I don’t think we’re alone in that,” he explains. “It doesn’t matter so much for us how long things take to get here, as long as it’s nice and efficient, because we already have a huge inventory level built up on our shelves.”

Gomez has taken a similar approach at Edwards Garment, though he acknowledges that strategy can be risky, especially for smaller suppliers. “We play to our advantage, and we’re able to keep inventory levels high for our bestselling items,” he says. “You have to be careful though, because you need to make the bets in the right places and not end up with the wrong inventory.”

Over the last five years, Edwards Garment has sold more custom, made-to-order products, which he says is more efficient because it doesn’t require inventory. “But it’s also compelling for us to sell them into bigger programs,” he adds. “We’ve seen that programs with 5,000 to 10,000 employees are really interested in custom pieces, which is good both from a business perspective and for supply chain efficiency.”