For several weeks, President Donald Trump had hinted at it. On Sunday, he made it official: The U.S. will be extending the deadline for reaching a trade deal with China beyond the previously set March 1st, a decision that prevents tariffs on $200 billion of Chinese imports from increasing from 10% to 25%.

The decision has significant importance for the domestic promotional products industry, which imports the vast majority of items sold stateside from China. “Who would have thought that the continuation of a 10% tariff would be viewed as good news? But in the context of what could have been, this was a positive outcome,” David Nicholson, president of Top 40 supplier Polyconcept North America, told Counselor. “We obviously are relieved that the 25% tariff has been postponed for now.”

David Nicholson, President, Polyconcept North America

Trump announced the trade deal extension deadline and stay on the tariff increase in a couple of tweets, saying that the U.S. and China have made substantial progress on key issues in recent negotiations. He plans to meet with Chinese President Xi Jinping at Mar-a-Lago, a Trump resort in Florida, to firm up a final deal. Media outlets were reporting that the meeting could occur before the end of March. “I believe all the conjecture and threats will be resolved, as both nations would suffer tremendously if additional taxes were imposed,” Memo Kahan, owner of Top 40 distributor PromoShop (asi/300446), told Counselor.

I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very......

— Donald J. Trump (@realDonaldTrump) February 24, 2019

....productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!

— Donald J. Trump (@realDonaldTrump) February 24, 2019

In the short term, the pause on the tariff increase could lead to some positives, industry executives said. “The near-term impact will be that companies will increase their overseas orders and will not feel the pressure to increase prices due to these tariffs,” Larry Cohen, president of Top 40 distributor Axis Promotions (asi/128263), told Counselor.

Still, while tariffs holding steady for the time being has been welcomed by many promo professionals, executives say it’s more a temporary reprieve from worse pain, rather than a substantial step forward. For one thing, there are a variety of unknowns, including questions about how the trade deal will play out and what ramifications that could have for the ad specialty market. That’s not good for business. “Uncertainty is tough on our industry,” Bill Korowitz, CEO of Top 40 supplier The Magnet Group (asi/68507), told Counselor. Cohen made a similar point. “There is still uncertainty in the market,” he said. “Therefore, importers will be more cautious so as not to get caught with items in transit when a possible tariff is imposed. There needs to be more certainty before people fully relax.”

Bill Korowitz, CEO, The Magnet Group

The uncertainty includes questions over whether or not any tariffs will remain in place after a deal is struck – and, if so, for how long. Naturally, suppliers and distributors that source/buy most of their products from China want to see the tariffs abolished. Even though the tariffs are on Chinese products, it’s the importing American companies – and, often, ultimately consumers and B2B end-buyers – that pay the price to cover at least some of the levy burden.

“Tariffs at any level are bad for our industry and for the economy as a whole,” said Nicholson. “To date, they have had a negative impact on prices and the value of the products we sell. Longer term, tariffs and the trade dispute have the potential to destabilize the current supply chain critical to our industry. We’re already seeing this play out as China’s manufacturing sector has suffered.”

On the subject of supply chain: Some industry executives think the tariffs have catalyzed more promo firms to start diversifying their supply chains beyond China, a movement that will continue even if a trade deal is reached and tariffs shelved. “These tariffs have pushed companies to start looking for other places to produce their goods that are outside of China,” Cohen told Counselor. “This makes sense given that China is likely to continue to be a formidable foe and trading partner for a long time.”

Larry Cohen, President, Axis Promotions

Despite ongoing concerns on tariffs and trade, the recent positive messages from Washington D.C. and Beijing have promo executives optimistic that better days are ahead. “Hopefully this is a sign that progress is being made and that an agreement can be reached in the coming weeks,” said Nicholson. If/when a deal is reached, it probably won’t have “a major impact on our industry except that the agreement will bring more certainty to the overall trade environment, which allows companies to plan their purchases,” Cohen told Counselor. In the end, the promo space will be fine, Korowitz believes. “Our industry is very resilient,” he said. “We will move past this.”

In all, the Trump administration has imposed tariffs on $250 billion in Chinese goods. China has responded with counter tariffs on at least $60 billon in U.S. imports. Trump initially aimed to escalate the 10% levy on $200 billion in China-made products to 25% on January 1, but he said late last year that progress in trade talks made it reasonable to extend the rate acceleration date to March.