Independence Day is just around the corner and Americans are gearing up for the festive Fourth of July celebrations. However, ongoing trade wars between the US and China may get in the way.
Every year, we greet the Fourth of July with mini American flags, family picnics, or even a few beers with friends all behind the backdrop of magnificent fireworks displays shooting up the sky. This year, however, fireworks retailers are on the edge as prices may skyrocket because of the US-China trade wars.
Notably, almost all (if not all) fireworks sold in the United States comes from China, who’s the world’s largest manufacturer. In turn, most US retailers depend on the country for annual events such as Independence Day, Christmas, and New Year’s when demand reaches its peak.
President Donald Trump’s on-going and rising tariffs on Chinese products are bound to raise prices, and fireworks are not an exception, which puts US retailers in a tight spot due to imminent profits loss.
Just recently, the United States imposed tariffs on 25% or $200 billion in annual imports from China, which affects almost all products that the US sources from China. In recent news, the Trump administration is threatening to increase that figure to $500 billion.
Upon announcing the tariff raise, Trump reasoned via Twitter that the US could source other materials in neighboring countries in Asia such as Vietnam. However, fireworks are a specific matter.
“We depend on China for a lot of imports, of a lot of products,” said Greg Ip, the Wall Street Journal’s chief economics commentator, to CBS. Ip said the prices of goods like fireworks are volatile because there aren’t American substitutes.
Currently, ninety-nine percent of backyard fireworks, like sparklers, cone fountain fireworks, and firecrackers, come from China, and 75% of professional-grade display fireworks come from the country. America’s fireworks industry imports 270 million pounds of fireworks from China and makes around $1.3 billion in annual revenue.
Furthermore, fireworks are an original and methodological product that the Chinese have long mastered, given that they have been making it for over a thousand years. CBS reported that if the United States would start making its fireworks, it could take at least a decade before the country could catch up with their production efficiency.
Fortunately for Fourth of July celebrations this year, fireworks prices will spike just yet despite the tariffs put in place. However, “the 2020 4th of July, the season could be significantly impacted.” Julie Heckman, executive director of the American Pyrotechnics Association, said in an interview.
Heckman, whose group represents both retail fireworks vendors and professional fireworks display companies, even told that Americans don’t need to wait an entire year to feel the effects of the higher tariffs on fireworks. As early as Christmas, when people start having ideas of repurchasing pyrotechnics, consumers can expect to spend a few dollars more.
In other words, the 25% increase could directly affect businesses and consumers even more. “For retailers, most likely, they’re going to have to pass on at least 20%,” Heckman said. “And for the small displays companies, the margins are so narrow right now…that I can see them passing the full 25% on to their clients. I just don’t think there’s any wiggle room for the display industry to absorb [the costs].”
Retailers are hoping that Trump will finally sort out a deal with Chinese President, Xi Jinping during the G20 Summit in Osaka, Japan later this week and put an end to trade wars that continues to plague the American people.
Meanwhile, back in the US: close to 38,000 fireworks have been recalled for violating federal standards, USA Today reports.
The U.S. Consumer Product Safety Commission announced four separate fireworks-related recalls this week for fireworks that were “overloaded with pyrotechnics,” that could set off explosions more enormous than expected, and could potentially lead to more accidents as Fourth of July celebrations are nearing.
The fireworks indicated are Grandma’s Fireworks in Indiana, which accounted for about 25,000 products across 18 different varieties. Also, Patriot Pyrotechnics in Michigan with 11,000 recalled products across 22 different ranges. The third is Keystone Fireworks in Pennsylvania with about 1,660 G-Force Artillery Shell Fireworks. Lastly, GS Fireworks in Michigan who is recalling approximately 260 fireworks in 26 different varieties.