Marketing, as many of us know, is often the first thing to go when revenues fall and profits dry up.
According to Benjamin Franklin, "Nothing can be said to be certain, except death and taxes." Now it appears a subset of the latter may have an impact on the budgets of American exhibitors, as a variety of tariffs have either been proposed or imposed on goods imported from China. And many U.S. exhibit and event suppliers worry those tariffs could hurt our industry.
Much of the logic behind these tariffs is straightforward: They remove the incentive for American companies to import lower-cost foreign goods and materials, and they punish foreign countries for trade policies unfavorable to the United States. The problem, however, is twofold. First, in most cases the foreign items being taxed will still be cheaper than domestic alternatives, meaning the tariffs will not deter U.S. companies from sourcing and manufacturing overseas. Furthermore, economists – and exhibit suppliers I've spoken with – agree these tariffs will not hurt the Chinese, but rather American consumers. Unlikely to absorb cost increases by curtailing their profit margins, most U.S. companies are expected to pass the buck on to buyers the same way businesses imposed fuel surcharges as a result of rising oil prices. (And, in case you didn't notice, those fees didn't all disappear when the price of oil went back down.)
The next time you're on the trade show floor, take a look around and note the omnipresence of aluminum extrusion. Consider the power supplies behind every piece of electronic equipment. Count the LEDs in everything from simple clip-on lights to massive multimedia installations. And think about the miles of wire running beneath booth carpet. Then imagine the impact of these items increasing in price by 10, 25, or even 35 percent.
Rob Cohen, vice president of Display Supply and Lighting Inc., recently testified before the Office of the U.S. Trade Representative regarding the impact that just three of the 6,031 harmonized tariff schedule (HTS) codes that would be affected by the proposed tariffs might have on the face-to-face marketing industry. In his post-testimony comments, Cohen explained how his company sells lighting equipment used in the trade show and event markets, which he described as "the lifeblood for companies to economically reach their customers and introduce new products and technologies." He goes on to write that "this will no doubt have a significant negative impact on the face-to-face marketing industry – namely trade shows."
Think about your return on investment from recent shows. Now shave a little off the top and ask yourself what might become of your budget, your program, and possibly your career if those metrics were circulated in your post-show reports. Then imagine how your customers' – and their customers' – purchasing decisions will likely be impacted by the burden of price increases on the products and materials covered under the tariffs.
Exhibitors who weathered the Great Recession remember what life was like for face-to-face marketers dodging the budgetary ax and wondering if they'd still have a job next month. Those were the bad old days, when the value of trade shows was called into question almost daily, and companies arbitrarily slashed exhibit-marketing budgets without regard for what those cuts might mean to their sales pipeline. Marketing, as many of us know, is often the first thing to go when revenues fall and profits dry up – which, ironically, is part of the reason recovery is so slow to come once the economy stabilizes.
The bottom line is that your bottom line might be affected by tariffs you don't entirely understand levied on countries half a world away. But when balancing the books requires a Cirque du Soleil performer, it's the heads of marketers that usually roll.