ELLY GRIMM
• Leader & Times
The shopping season for back-to-school supplies might seem some ways off, but those who will be doing that shopping should expect some changes when they go to the store.
“Obviously, tariffs have been impacting all industries across the board, no sector or commodity has been spared,” OEC Group Sales Supervisor Joseph Firrincieli said. “With the back-to-school supplies, that stuff should be here already or get here very soon. Unfortunately, even with this three-month hold/suspension on the 145 percent, companies really aren't going to be able to take advantage of that since back-to-school stuff usually goes on the shelves shortly after the 4th of July. That also applies to holiday supplies/decorations – those usually go on the shelves early because that's when the stuff actually gets in. With the 4th of July holiday slightly more than a month away, most back-to-school stuff should already be here, and whatever hasn't gotten here yet probably wouldn't make it in time to be put on the shelves right after the 4th of July like usual. There are definitely going to be impacts on Thanksgiving, Christmas and New Year's items because all of that stuff should be shipping out either in August so they can be on the shelves around Labor Day. Right now is pretty much the end of the back-to-school shipping season.”
Nasdaq noted a few other effects back-to-school shoppers could see.
“Many school districts aim for every student to have a personal laptop or tablet for taking notes, doing homework and carrying out research. However, the tariffs are set to make that more expensive, along with other personal electronics. Most laptops and smartphones used in the United States are imported from China. Until recently, there were no tariffs on those items, so consumers are used to paying relatively low prices. When tariffs go into effect, students and their parents could experience major sticker shock,” Nasdaq noted. “The cost of packing lunches could go up, depending on what you put in your kids’ lunchboxes. Experts say tariffs will lead to higher prices on fruit, cheese, nuts and candy bars because those items tend to be imported. You can expect a 4 percent increase on fresh produce, on average, and a 2.8 percent increase on your overall grocery bill. The cost of buying textbooks could soar under the new tariffs, experts warn. Paper and ink are usually imported from China and Canada. Rising costs will make it more expensive for publishers to put out books, and those costs will likely be passed on to consumers. The tariffs are expected to raise the cost of building materials imported from China. That includes the steel used in structural beams and wall studs. Hopefully, U.S. steel producers will be able to increase their production enough to offer schools a more affordable alternative to Chinese steel. Otherwise, it will become much more expensive to build new schools or carry out major school repairs. Those costs could get passed along to American families through higher property taxes.”
Overall supply chains will also be affected, according to Firrincieli.
“There is a possibility there won't be as much inventory, because not as much was shipped in due to the tariffs,” Firrincieli said. “But that will depend on some different factors like where it's being shipped from, what the tariff levels will be when the inventory is shipped and some of that. The 145 percent tariff was put into effect in April, which might have been when some shipping was being done, so some companies might have been able to sidestep some of that. I would say people can expect prices to be higher and to plan on some items possibly being in short supply.”
With that in mind, Firrincieli said parents might have to do some back-to-school shopping early.
“I would advise shoppers to get some of what they need as soon as possible and while it's available – i.e., if you want to start a stock of pencils/pens and notebooks and some of those items, do it now so you know you have it ready when back-to-school time officially rolls around,” Firrincieli said. “Certain items will probably all but fly off of the shelves, and the inventory might not be as high as in past years, so if there are some items you can buy now, I would say go ahead and grab them. Prices will also be higher due to the duties and tariff rates compared to the past, so people should definitely expect to pay more. I would say pretty much all back-to-school supplies will be impacted in some way, especially since a lot of what people buy is made in China or Europe or South America or Southeast Asia, all of which are subject to the Trump Administration's tariffs. Even though some of those got temporarily suspended, there's still that 10 percent blanket tariff, which is still higher than what people paid before. My suggestion to any importer, especially if you're shipping from China, get as much inventory as possible in this period before things get lifted, purely because in my professional opinion, things will remain somewhat uncertain for a while.”
Firrincieli added the OEC Group is advising clients to ship goods as much as possible now.
“We really just handle the shipping side of things, and what I've been suggesting to the majority of clients is, since that 145 percent tariff is lifted for three months, ship as much as possible in that period, because we have no idea what could happen afterward,” Firrincieli said. “We don't know if that number will go up, down, stay the same, if there will be another suspension, etc., so what we've been suggesting is bringing in as much as possible as quickly as possible within this period. We've also been suggesting to clients, if they have extra warehouse space where they can store inventory, especially if it's a bonded warehouse, use it, because again, we're not sure what will happen once the suspension is lifted.”
According to Progressive Grocer, tariffs are also driving cost increases and creating operational challenges across the wholesale distribution industry. The National Association of Wholesaler-Distributors (NAW), in collaboration with Modern Distribution Management (MDM) Research, released new survey results on the impact of tariffs on the supply chain.
"The survey indicates that one-third of distributors are already facing price hikes of 25 percent or more. Though these increases haven’t hit store shelves yet, it’s an indication of where prices are headed," Eric Hoplin, CEO of Washington D.C.-based NAW, noted in a Progressive Grocer press release.
“When the tariffs were implemented, companies drastically reduced their shipping compared to what they would normally be doing. We also saw companies put their inventory in bonded warehouses, where they could keep it for a certain amount of time without being subject to what the tariffs were when they were shipped in,” Firrincieli said. “But the thing with that is, then you have to start paying the storage fees and some of those other costs, so it's almost like a 'Heads I win, tails you lose' situation.”
Firrincieli added it is hard to give a prediction for the rest of the year.
“When the tariffs went into effect, especially the 145 percent ... now that we've seen that suspended, there's been a big surplus in shipping because companies are trying to ship as much as possible as quickly as possible, especially with ocean freight,” Firrincieli said. “And rates are also going up for truck shipping and air freight, so people are being affected by that too. If you're a company that ships 100 containers every month, and you're not shipping at all between the new year and factories being closed for multiple months, tariffs are being put into effect and then taken away for three months, you've now got three months of backlog and then three months' worth of inventory to ship on top of that backlog. You're going to be doing as much as you can to be shipping at a lower duty rate. Peak season is coming up, so a lot of the items being shipped out in June and July will end up being holiday goods, whether it's Christmas toys or other holiday decorations. The industries that will be affected and need to ship the most will be for toys and holiday decorations, they'll really need to ramp up production in the near future here. Furniture ships year-round, but there are multiple sales that happen around the holidays, so that stuff will also probably be shipping fast and furious. But definitely the companies that will really need to ship the most while these tariffs are suspended will be the companies bringing in toys and artificial Christmas trees and any other holiday goods.”
The next few months especially, Firrincieli said, will likely remain unstable.
“I personally think the next three to six months will remain wonky. Between peak season, the tariffs temporarily being lifted, multiple conflicts going on in the world (Israel/Palestine, Russia/Ukraine and India/Pakistan), the Suez Canal being closed, consumer demand now being relatively low, and multiple other circumstances, I think things will remain wonky,” Firrincieli said. “Obviously, it's early to say that with 100 percent certainty, but given all those aforementioned factors, I can't see too much stabilization for quite some time. I think things will remain relatively tight and uncertain, and people should be ready for that.”
