When the Trump administration announced plans to slap 25% tariffs on $300 billion in Chinese imports, a sense of panic settled over the firework industry. Companies, who rely on China’s pyrotechnic products, worried possible tariffs would darken skies around the country.
“The only global supplier for consumer fireworks is China,” Atlas PyroVision Entertainment CEO Steve Pelkey told Yahoo Finance’s On the Move. “There is no other country that can manufacture those quantities. “
The U.S. now imports 86% of display fireworks used in shows from China, according to trade data from the U.S. Census Bureau. Pelkey’s estimates that the rest of the professional grade fireworks (about 10%) are produced from Spain, Italy and Mexico.
“They’re putting an immense amount of pressure on what is basically small businesses that have less than 25 employees,” said Pelkey, who joined hundreds of other business owners and executives at hearings last week urging the Trump administration to stop plans for additional tariffs. “These are three-, four-, five-generation family businesses that are struggling just to meet their financial needs throughout the course of the year.”
Each major firework display utilizes about 10 firework containers, which would cost about $25,000 each container if increased tariffs are imposed. Companies would have to make as much as $250,000 in revenue to make up the additional cost, added Pelkey.
“Those that can't pay for it are just going to have to hold off and cut back their business and maybe lay off employees,” he said.
Future firework spectacles are in danger
Pelkey said one of the biggest nights for fireworks — the Fourth of July — could be in jeopardy if Trump increases tariffs. “You have fireworks that can come from other countries but nowhere near the quantities that are required to perform the Fourth of July in the United States,” Pelkey said.
The good news is the new tariff shouldn’t affect this year’s Fourth of July celebrations since products for next week’s festivities have already shipped and arrived. But many companies are holding off on future orders.
And the bigger issue is orders have already been placed for 2020 and those shipments are expected to arrive starting in August. If a deal isn’t reached by time those shipments arrive, companies will get hit hard by the tariffs. And at some point the greater expense will be passed on to the municipalities and customers, according to Pelkey.
“I don't think that the fireworks companies can absorb much more than we've already had to absorb over the last year,” he said.
Valentina Caval is a producer for Yahoo Finance’s On the Move.