PPB July 2019

For companies that have a certain budget for an event, he believes that if prices increase because of the tariffs, it may affect quantities. That means his team is constantly adjusting to what’s going on. “We have flexibility; there are so many products at so many price points that if the budget was $X [per product], now I can show you one for $X [per product], and move things that way. Other industries don’t have the flexibility that we do. Look at car manufacturers. There’s not a lot of elasticity there,” he says. TomGoos, MAS, president of Kirkland, Washington-based distributor Image Source, Inc., describes the current situation as very dynamic. “It’s not black and white—there’s a lot of confusion for my sales team and our clients. What they are hearing is it’s a set percentage increase and that’s not really true. If it’s a component part, on a lanyard for example, the increase may be on the clip but not the strap. It’s impossible for us to say, with all the million different variations of products we sell, exactly what that increase will be for our customers in overall, broad categories.” Instead, Goos is educating his sales team and, in turn, his customers. He sends out a weekly newsletter, the Weekly Heartbeat , to report on what’s going on with the business, industry and employees, and recently has been including tariff updates in every issue. He’s also looking at factories outside of China. “We moved a program out of a factory in China to one in Cambodia because at least we’ll have consistency in pricing,” Goos says. And the company has begun adding a disclaimer on quotes for large projects that reflects potential changes in pricing because of the tariffs. “But if you are going to add a disclaimer, I don’t think it’s a good idea to hide it under an asterisk,” he says. “For me, it’s much better to have a really good conversation with the customer about it instead.” Bill Mahre, CAS, president of supplier ADG Promotional Products in White Bear Lake, Minnesota, says he has not added any tariff-related information to the company website, but is making sure everyone knows that published prices— especially in catalogs—may change if the company sees significant impact to its rawmaterial costs. “We do not intend to make changes that amount to a couple of pennies but dramatic cost impacts to certain categories may necessitate a price change in the future,” he says. “Overall, we still believe the tariff issue is essentially an economic tool for the administration to negotiate better trade deals. Never before have we seen this type of strategy, so we are definitely in unchartered waters on how to handle the costing impact on a short-term and long-term basis. Our intent is not to raise and/or lower prices broadly or without specific rationale. For example, just because an X-percent tariff has been announced today doesn’t mean it will impact our product costs immediately. In some cases, we have existing inventory that will keep us status quo from a cost structure for months.” Mahre adds that his sales and customer service teammembers are being communicated with on how to answer questions and provide the best information available at the moment. “The difficulty is that things seem to change on a day-by-day basis and we are just one tweet away from a whole new direction,” he adds. Ira Neaman, CAS, owner of supplier Vantage Apparel in Avenel, New Jersey, recently recorded a video designed to communicate with customers about the tariffs. In it, Neaman speaks directly to the camera letting customers know that the company has a diverse supply chain and is not solely dependent on China to source products, so it won’t be raising prices in the near term. The video also reassures customers of the company’s continued commitment to its current “The difficulty is that things seem to change on a day-by-day basis. We are just one tweet away froma whole new direction” Bill Mahre, CAS, president of supplier ADG Promotional Products in White Bear Lake, Minnesota In May, the U.S. Trade Representative (USTR) announced a proposed List Four of Chinese imports upon which tariffs will be levied on approximately $300 billion in additional products , representing almost all imports from China not already covered under the previous tariff lists. The Tariff Effect | FEATURE | JULY 2019 | 59