The Trump administration transformed global trade policies by implementing a series of sweeping tariffs. Advertisers should ask the following questions.
1. How can I comply with pricing and transparency laws when my costs increase?
Tariffs are typically calculated as a percentage of a product’s value, paid by importers, and collected by U.S. Customs and Border Protection (CBP). Although Trump now imposes a 10% across the board tariff on most countries, China’s total tariff rates can now exceed 145%. Because tariffs often increase the landed cost of imported products, companies might need to raise prices.
When incorporating the tariffs into pricing, companies should monitor states’ tariffs announcements and state price gouging laws. (COVID-19 price increases resulted in aggressive enforcement.) Companies should follow “drip pricing” laws requiring the upfront advertised price to reflect all fees (including tariffs and surcharges). Companies should brace for class actions under California’s “Honest Pricing Law,” and challenges to “junk” fees.
2. How do I label my products’ country of origin when production changes?
Tariff rates are determined by the country where the product is manufactured or undergoes substantial transformation. All imported products must be clearly marked with their country of origin. If this country changes, the packaging must be updated. Country-of-origin markings, especially China-sourced shipments, could become an enforcement focus for CBP.
3. How do I promote my products as “Made in USA”?
Claims like “Made in USA” used to attract consumers who want to “buy American” are closely scrutinized. The Federal Trade Commission (FTC) regulates U.S.-origin claims through its “Made in USA” rule, which prescribes specific standards for these claims. California law also restricts these claims and imposes specific percentage thresholds to substantiate these claims.
4. How do I deal with a changing supply chain?
Tariffs can cause customs and supply chain delays when shipments are held for duty assessments, compliance checks, and document reviews. As discussed in our recent webinar, unpredictable tariff policies exacerbate delays and uncertainty for importers. Beginning May 2, the elimination of de minimis (duty-free, simplified Customs clearance) treatment for low-value goods from China and Hong Kong may create longer clearance times, shipment backlogs, and added administrative burdens. As sudden rounds of tariff hikes are imposed with little notice, businesses must continuously and repeatedly examine their supply chain.
5. What happens when my products won’t ship on time?
Consumers increasingly expect two-day and overnight shipping. Companies should review shipping policies and advertising to account for disruptions. The FTC’s Mail, Internet, or Telephone Order Merchandise Rule requires companies to have a reasonable basis for advertised shipping claims. If the product won’t ship within the advertised time, companies must provide notices and, in some instances, seek the customer’s consent to the delayed shipment. California law has similar requirements. Be careful when charging customers extra for expedited shipping.
6. How do I manage Returns, Refunds, and Money-Back Guarantees?
Businesses that restock or resell returned products should account for logistics and timing when advertising returns deadlines. If customers must pay return shipping to take advantage of a money-back guarantee, clearly and conspicuously disclose that requirement.
7. How do the tariffs affect my subscription offers?
When tariffs disrupt and delay the usual cadence of subscription deliveries, is that a “material change” requiring notice to consumers? Some plaintiffs could argue that material change notices are required for price increases and shipping delays and use this hook to challenge a company’s entire autorenewal program.
8. What about my supplier and fulfillment contracts?
Advertisers should evaluate their supplier and fulfillment contracts to determine who bears the burden of taxes, shipping, returns, and documentation, including provisions like price adjustment clauses, force majeure provisions, clear representations and warranties, and termination rights.
Best Practices in an Uncertain Trade Environment
Companies should avoid knee-jerk reactions to every change in trade policy, as news affecting the global economy breaks hourly. But failure to stay apprised of shifting policy may result in additional complications and costs down the road.
Companies should be transparent when encountering trade-related hurdles, including upfront disclosures and real time notices. As with all advertising, companies should be truthful and accurate in their representations and avoid practices that could be challenged as unfair or deceptive.
