Throughout his campaign, President-elect Donald Trump spoke about imposing tariffs on imported goods in an effort to boost Made-in-America manufacturing and bring jobs back to the U.S. Now that he’s being sworn into office in less than a month, those promises are close to becoming reality, with CNN reporting that Trump’s transition team is discussing a proposal to impose tariffs as high as 10% on imports.
Incoming White House Chief of Staff Reince Priebus originally pitched a 5% tariff on imports, but now the higher figure is in play and could be implemented via executive action or as part of a sweeping tax reform package pushed through Congress.
By imposing tariffs, Trump risks raising the cost of consumer goods in America. Many believe the tariffs would also embroil the U.S. in trade wars. The political move would potentially have a major impact on industry suppliers and distributors who import products from China and other factories abroad. “Tariffs would ultimately be bad for producers and consumers, raising prices, reducing choice, and risking a trade war that nobody wins,” says Jonathan Isaacson, president of Gemline (asi/56070).
Randy Chen says it is too early to surmise how Trump’s policies could affect the industry. “This is such a big, broad stroke, so it is hard to say how it will affect our promotional product markets,” says Chen, who is the president of Impex International Inc., a New Jersey-based firm that provides direct import services and U.S.-based warehousing of imports for more than 100 promotional products industry suppliers. “I can see this helping USA manufacturers if they are at a disadvantage because they can’t compete with countries with lower labor cost. But, for example, currently there are not many mass-scale toy manufacturers in the USA. The tariff rate for toys is zero. If you raise the tariff on toys, what companies will this help in the USA? All it does is to make toys in Walmart more expensive.”
On Sunday, former Florida Governor and current Congressman-elect Charlie Crist told CNN that he is open to a 35% tax proposed by Trump on businesses that leave the U.S. or fire employees and close factories for ones overseas. “It’s all about jobs,” said the Democrat, “and making sure that we have American jobs protected, we protect the American worker, give them the opportunity to be able to provide for their families, get a college education.” Crist added that “just because the messenger is somebody that was in a different party is no reason to cast [an idea] out.”
Trump has consistently targeted globalization and free trade as domestic job killers, vowing to rip up the North American Free Trade Agreement (NAFTA). On Tuesday, Trump attacked General Motors for making cars in Mexico, which are then sold in the U.S. and countries throughout the world. He tweeted: “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!”
Colin Hansen, former Finance Minister of British Columbia who co-founded Canadian distributor Image Group Inc. (asi/230059) with his wife Laura, spoke with SGR Magazine in October about the threat to Canada’s economy if NAFTA was nullified. “NAFTA has been extremely beneficial for not just promo product companies, but all businesses in Canada,” said Hansen, who currently serves as president of nonprofit AdvantageBC. “If either Trump or Clinton decides to limit free trade, Canada’s recession could extend to disastrous effects.”