Industry Report

Tariffs Threaten to Take the Bang Out of Fireworks Business

YOUNGSTOWN, Ohio – By adding fireworks to a long list of Chinese imports as potential targets for new tariffs, the Trump administration could take the bang out of everyone’s summer celebrations.

It could also mean disaster for the domestic fireworks industry, which almost exclusively depends on China for their supply of bottle rockets, roman candles and sparklers.

“This is a killer tariff because there is no alternate supplier,” said Bill Weimer, vice president of B.J. Alan Co., which distributes its products under the brand name Phantom Fireworks. “Because of this unique situation, this will not have the desired effect on China.”

Earlier this month, the U.S. Trade Representative’s Office announced a list of more than 3,000 Chinese imports valued at $300 billion that could possibly be subject to a 25% tariff.

B.J. Alan CEO Bruce Zoldan visited the White House May 22 and met with President Donald Trump and other officials, Weimer said. During the meetings, Zoldan made clear how these tariffs could impact the industry. 

Weimer said that 97.75% of all fireworks in the United States are imported from China. The remaining fireworks come from eight countries including Israel and the United Kingdom. However, these countries don’t have the capacity to serve the U.S. market, let alone B.J. Alan.

“Our company alone imports more than those countries export combined,” he said.

Weimer said that most of the inventory for 2019 is secured, so any tariff imposed this year wouldn’t impact this summer’s festivities.  A prolonged trade impasse, however, could do real damage to B.J. Alan’s business next year, he said.

Should a 25% tariff on fireworks proceed, the company would have no other choice but to pay the penalties and pass higher prices on to the consumer, Weimer said.  That means a reduced volume in sales next year, which in turns impacts revenue.

“Business would go down, revenue would go down and our expansion would be affected,” Weimer said, including four new showrooms the company has planned for the region. “Employment would be affected.”

Ironically, China won’t be impacted in the slightest, Weimer said. “It won’t sting them at all.”

Hearings in Washington are scheduled for June 17, which is also the deadline for filing written comments, Weimer said. “We have to let them know by June 10 if we’re going to deliver a verbal statement,” he noted.

The trade war between the U.S. and China escalated this month when the Trump administration raised tariffs from 10% to 25% on $200 billion worth of Chinese goods imported to the U.S.  Trump then threatened to place a 25% tariff on all other Chinese imports, which includes fireworks.

Beijing retaliated by raising tariffs on $60 billion worth of U.S. products imported to China.

“We’re in favor of making a trade deal with China that’s good for America,” Weimer said. “The tariffs are an interesting approach, but in this case, they would not have the desired effect that is intended.”

Copyright 2019 The Business Journal, Youngstown, Ohio.