Divide

The promotional products industry will not thrive again until the economy recovers. And the economy won’t recover until COVID-19 is finally under control.

Everyone can agree on those two sentiments. Which presidential candidate is best equipped to lead us out of this quagmire? On that subject, there’s far less agreement.

“Joe Biden will work tirelessly to bring this pandemic under control,” proclaims Kathy Finnerty Thomas. The president of Chandler, AZ-based promotional products distributor Stowebridge Promotion Group (asi/337500) believes the former vice president has the experience and acumen to spearhead a response to the coronavirus that will have far better results than the response presided over by President Donald Trump. “We need a leader who will unite the country, take control of this virus and create conditions that will jumpstart the economy.”

Gregg Emmer couldn’t disagree more wholeheartedly. The vice president/chief marketing officer at Top 40 distributor Kaeser & Blair (asi/238600) maintains that, until COVID-19 struck, President Trump’s policies were instrumental in helping to propel economic growth in the U.S. That growth created marketplace conditions that helped the promo industry accelerate sales, Emmer asserts, adding that Biden’s policies would stunt business growth at a most crucial time. “President Trump,” says Emmer, “will again rebuild the U.S. economy, get unemployment back down to historic lows, and continue to make trade deals that benefit rather than hurt the U.S.”

To say that Donald Trump has been a polarizing president is an understatement. In fact, according to Gallup, he’s the most polarizing president in the 75 years that the polling firm has been tracking such data, with his third year in office yielding an approval gap between parties of 82%. And that was before the pandemic sent the economy crashing and put millions of people out of work.

It’s no surprise that the political and ideological rift that is tearing our country apart is also running through the promotional products industry. To borrow a tagline from the Biden campaign, many believe the 2020 presidential election is a “Battle for the Soul of the Nation.”

Against that high-stakes backdrop, what would a Biden presidency or a Trump second term potentially mean for the world of promo? From assessing the president’s first-term impact on the industry to gauging the former vice president’s plans for tariffs and the economy, it’s clear that up to election day, common ground will be hard to find.

The Economy

During the president’s tenure in office, before the pandemic hit, the promo industry reached record heights, including a total of $25.8 billion in revenue in 2019. The U.S. economy also continued a record run of 11 years without a recession.

Was that the work of Trump’s pro-business measures, or the long-lasting impact of decisions made by President Barack Obama’s administration? Such is the eternal debate (credit/blame the incumbent or the predecessor) of economists and political pundits when it comes to assessing the state of the economy.

With President Trump, supporters strongly feel that the Republican has taken actions that amplified and maintained economic momentum. They point to Trump’s slashing of the corporate tax rate from 35% to 21%, deregulation initiatives the administration claims have saved $90 billion in regulatory costs to the economy and consumers, and tax cuts for small businesses and middle class families – all catalysts of a so-called Trump economy that had a pre-COVID unemployment rate of 3.5%, which was the lowest level since 1969.

“Trump supports business, and his administration has propelled all business forward,” Emmer says. “When our customers thrive, so do we.”

Trump critics offer a counterpoint perspective on the president’s impact. For starters, they argue that the collective distributor sales gains experienced under Trump were a continuation of accruing success that began under Obama (when Biden was, of course, vice president). They also point to the fact that more jobs were created in the final three years of Obama’s tenure (8.1 million) than Trump’s first three years in office (6.5 million), and that wage growth actually increased more under Obama than Trump (1.3% to 0.8%).

And what about Biden? Supporters of the president counter that the Democratic candidate will be less friendly to business owners. A common view is that Biden’s intention to raise the corporate tax rate from 21% to 28% (among other measures) could compel companies to pull back on spending, including lower investment in hiring and marketing/advertising/employee recognition. Others believe that Biden will ratchet up regulation, creating red tape that gums up the works for business. This could have a further chilling effect on promo sales.

“As a business owner, I feel Trump’s policies are favorable to my business, while Democrats choke the living daylights out of doing business,” says Randy Chen, president of New Jersey-based Impex International, which provides direct import and warehousing services for promotional products companies.

In his “Emergency Action Plan to Save the Economy,” Biden has stated that he will champion work-sharing that will allow businesses to retain employees on reduced work hours and have the government cover the rest through short-term unemployment benefits. He claims he will prioritize relief money for small business and extend stricter oversight on large corporations seeking taxpayer assistance. And he plans to move Congress to do more to help people struggling from the pandemic, including forgiving a portion of federal student loan debt, increasing social security checks, and doling out more money to families “should conditions require.”

“There is risk that Biden takes a less ‘business-friendly’ stance in terms of tax policy and business regulation,” says a Top 40 supplier executive (who wished to remain anonymous given the heated discourse over the election). “But given the current state of the economy, I believe that Biden’s priority and focus will be getting the economy restarted.”

Trump supporters, however, argue that Biden’s emergency plan sounds more like managing bad times – rather than a more proactive approach that would propel the economy toward true strength. These proponents of the president feel Trump’s campaign pledges to further cut taxes, create 10 million new jobs in 10 months, expand opportunity zones, continue deregulation, and spur the creation of 1 million new small businesses, among other measures, will return the U.S. economy to robustness. “We will again build the greatest economy in history,” Trump asserted in his speech at the Republican National Convention.

COVID-19

Critics of the president this year have cited the lack of national leadership in response to the coronavirus pandemic, arguing that the federal government’s slow response and muddled messaging have had severely negative effects on public health and the economy. Meanwhile, supporters highlight the fact that, under Trump’s watch, our nation’s healthcare system has held firm while vaccines are being developed with historic speed; economic aid has been secured for millions of small businesses (where Republicans have often blocked such efforts historically); and the U.S. GDP retreated 10.6% during the first half of the year – a less severe decline than that experienced by other major economies like the United Kingdom, France, Italy and Germany (though not as good as China).

The difficulty in assessing the president’s handling of this crisis is that opinions have fallen along partisan lines. An August survey from CBS News and YouGov found that while 62% of all registered voters thought the U.S. response to the coronavirus was “Going Badly,”; 73% of Republicans thought it was “Going Well.” Trump – and many supporters – have repeatedly pointed to what they say is a lower COVID mortality rate among Americans as a sign that the nation’s response has been better than other countries, such as those in Europe.

Biden supporters believe the former VP has a track record that indicates he’d better serve America at this point in its history. “Biden was part of the team that brought the economy back from the Great Recession,” says John Barber, owner of Agawam, MA-based distributor CHH Engraving Inc. (asi/154871). For instance, Biden oversaw infrastructure spending in 2009 to counteract the recession.

“As a business owner, I feel Trump’s policies are favorable to my business, while Democrats choke the living daylights out of doing business.” Randy Chen, Impex International

Barber and others assert that Obama/Biden left a “playbook” for dealing with a pandemic (merits of which Trump supporters dispute) that could come in handy, and that he’ll have the benefit of having seen the Trump administration’s actions during this crisis. Among his COVID-19 plans, Biden has indicated he would build a national contact tracing workforce (hiring at least 100,000 people), construct a nationwide vaccination program, ramp-up large scale manufacturing of vaccine candidates and provide premium pay, access to mental health care and (perhaps especially notable for promo) appreciation gifts to healthcare workers.

Meanwhile, Trump maintains that his priorities for COVID center on developing a vaccine by the end of 2020. In anticipation of future pandemics, he wants to produce all critical medicines and healthcare worker supplies in the U.S., while also refilling stockpiles of such critical supplies.

Tariffs

Promo professionals are quite familiar with the president’s hard line on trade with China, which resulted in tariffs on approximately $370-billion worth of imported products from China. The tariffs, which have remained in place during the pandemic, triggered higher prices on some of those imports and prompted suppliers and distributors who source from China to scramble to partially reconfigure supply chains and find some alternatives to Chinese production.

Trump critics within the promo industry maintain the policies have created instability and uncertainty. “Our president thinks he’s winning his fight with China, but we’re the ones paying the tariffs and our margins have suffered,” says Jeffrey Nanus, president of Norwood, NJ-based AAA Innovations (asi/30023). “The reality is that for some products, especially for certain tech items and products that require more complicated manufacturing, there’s no viable alternative to China. As long as the tariffs are in place, we’ll have to deal with them.”

By contrast, certain Trump supporters in promo think the uproar over the president’s import tariffs is both overblown and shortsighted. “Pricing of Chinese goods didn’t go up that much,” Chen asserts. And whether due to mitigated cost price increases or other actions by distributors, suppliers and overseas factories, data from Counselor’s 2020 State of the Industry report shows that only 15% of distributors reported that their sales have been negatively impacted by tariffs, while one in five distributors have had margins negatively affected by the levies.

The Trump Administration has parried with the Chinese government on a number of fronts, from cracking down on popular Chinese businesses (like TikTok, WeChat and Huawei) to ending preferential economic treatment for Hong Kong to assigning blame for the coronavirus. As the most prominent example of the president’s actions to stand up to China, the trade war is viewed by many supporters as a long-term play – part of a broader strategy that will contribute to positives like China acting fairer on trade (thereby benefitting U.S. companies, farmers and more) and increased manufacturing independence for the United States.

It’s extremely unlikely that Biden will continue the Trump administration’s China tariff policy as it’s currently constituted. Over the summer, Biden appeared to indicate that he would end the import tariffs, but his campaign acted quickly to temper that assertion, saying the Democratic candidate’s administration would reevaluate the tariffs and get fair play on trade from China, which boasts the world’s second largest national economy behind the U.S.

“Biden was part of the team that brought the economy back from the Great Recession.”John Barber, CHH Engraving Inc.

The possibility of ending tariffs will certainly appeal to many in the promo industry. “With Biden,” says the Top 40 supplier executive, “we are likely to see a more open and proactive approach to resolving the China trade dispute, which would benefit our market.”

Made in the USA

There’s at least one thing the candidates can agree about: the importance of products made in the USA. Biden wants to tighten domestic content rules to ensure products that say “Made in America” truly are, crack down on waivers on “Buy American” requirements and invest $300 billion to help power new solutions and jobs in stateside manufacturing and technology. Throughout his platform, Biden also talks about establishing union jobs in particular – something that could open the door for distributors to provide more branded merchandise and print products to unions.

President Trump has been a staunch proponent of Made-in-the-USA since he assumed office – something he and supporters assert will intensify in term two. Trump is vowing to bring back 1 million manufacturing jobs from China, offer tax credits to companies that repatriate jobs from China, award no federal contracts to companies that outsource to China, and allow 100% expense deductions for essential industries like pharmaceuticals and robotics that return manufacturing to the U.S.

“A second term will likely contribute to more promotional products being made in America, which will create more jobs for Americans,” says Randy LeFaivre, president of Washington D.C.-area based MetroLogo (asi/268938). “In the near term, these U.S.-made products will cost more to the distributor and therefore to the client, but I sense that both end-users and companies using our products to promote their businesses find value in buying and giving American-made products. I also think the entrepreneurial spirit in our industry will enable smart suppliers and distributors to find ways to bring the Made-in-USA costs down, while finding supply chains from countries other than China.”

According to the 2020 Global Ad Impressions Study, 57% of consumers have a more favorable opinion of an advertiser if the promo item was made in the U.S., however ASI research shows that less than 2% of distributor ESP searches are for Made-in-USA products.

Future Initiatives

Accurately prognosticating just what opportunities and pitfalls will present to promo under a Biden administration is difficult given all the variables that could come into play. Still, the former Delaware senator’s platform provides possible clues.

So-called “green” initiatives could, for instance, lead to increased sales potential tied to environmental sustainability initiatives and more interest in sustainably made promo products. Biden says he would invest $1.7 trillion over the next 10 years in what he terms a clean energy revolution, thereby creating 10 million jobs by his count. He aims to put the nation on course to have American-made electricity that achieves a carbon pollution-free power sector by 2035. He also intends to focus on what he termed climate-smart agriculture and conservation, including establishing 250,000 jobs tied to plugging abandoned oil and natural gas wells and reclaiming abandoned coal, hardrock, and uranium mines.

Other ample infrastructure investments geared toward generating millions of jobs are also in Biden’s plans.

For example, he’s pledging to provide every American city with 100,000 or more residents with zero-emissions public transportation options through flexible federal investments. He’s also talking about spurring the construction of 1.5 million sustainable homes and housing units, upgrading 4 million buildings and weatherizing 2 million homes over four years, and rebuilding/improving roads, bridges, green spaces and water systems across the U.S.

More broadly, some think a Biden presidency could influence a variety of brands to focus on themes like healing, inclusion, reconciliation and unity in their marketing and advertising, something that could factor into some clients’ merch campaigns.

“Brands are recognizing that consumers do care about the companies they’re buying from; this is an opportunity for brands to build a deeper, more emotional connection with their customers,” says the Top 40 supplier executive. “A Biden election win would further this movement and sentiment.”

If Trump wins re-election, many supporters believe he would aim to expand on initiatives from his first term. They feel the continued focus on Made-in-the-USA, tax cuts and deregulation will stimulate the economy, helping to drive things like infrastructure improvement and energy independence for the U.S. “He’ll keep cutting the red tape and keep the corporate tax rate low, which will help to create more jobs,” says Chen.

During his first term, Trump strongly supported the traditional oil and gas industry, signing an executive order to expand offshore oil and gas drilling and opening more leases to develop offshore drilling. His administration also acted to increase exports of energy resources. The president says he’ll continue this focus, vowing to “greatly expand energy development and keep America energy independent.” As the cloud of the coronavirus eventually begins clearing, helping mitigate the economic downturn oil and gas has experienced during the COVID-caused recession, Trump’s continued support of the sector could possibly help foster opportunity for promo sales with companies that operate in it.

Through his first four years, Trump increased military/defense spending and championed law enforcement. He’s committed to more of the same in a second term, saying, for instance, that he’ll fund and hire more police and law enforcement officers. The support for military/police could help create opportunities for promo pros with end-buyers in those arenas.

At day’s end, regardless of who becomes president, promo pros concur that they’ll have to adapt to the conditions of the marketplace and make the most of opportunities that arise. It’s what promo has always done, and what it will continue to do regardless of who is in the White House.

“We’ll have to think even more creatively and find new solutions,” says Finnerty Thomas. “There is something exhaustingly exciting about these times. The work is hard, but with some creativity and initiative, there are opportunities everywhere.”