Fireworks companies are celebrating the Fourth, but they too could get caught in the middle of the trade fight

Key Points
  • As the Fourth of July approaches, fireworks industry officials are wondering if their businesses might fall under future tariffs from the Trump administration.
  • China is by far the leading shipper in the world, with 85.6 percent of the global fireworks total in 2017.
  • Fireworks have not been targeted yet, but could be included in the next further-reaching list the White House is compiling.
Fireworks explode over Washington, DC. 
Paul J. Richards | AFP | Getty Images

As the U.S. gets set to celebrate its 242nd birthday with multicolored fireworks bursting in air, the suppliers of those pyrotechnics are starting to worry about whether they'll get stuck in the middle of a trade war.

So far, the Trump administration has not included the $1.24 billion fireworks industry on its list of China tariff targets. But as tensions intensify, China's standing as by far the global leader in fireworks exports might make too rich a target to pass up.

Bill Weimer, vice president of Phantom Fireworks, one of the nation's leading distributors, said he's anticipating "gangbusters" sales for the holiday, but is concerned about the future.

"The industry is definitely worried about it," he said. "It hasn't happened yet, and we hope it doesn't."

Macy's executives ring the closing bell at the NYSE in celebration of Independence Day
Before the fireworks, Macy's kicks off the holiday by ringing the closing bell

The concern comes just a few days before a sweeping set of U.S. tariff targets against Chinese imports takes effect. While fireworks indeed are expected to remain off the radar screen for now, a subsequent list of $200 billion in products that the administration is compiling could include just about anything.

Distributors have been stocking up lately as the Fourth of July gets closer and trade tensions accelerate.

Seaborne shipments increased 37.8 percent in May and June, according to Panjiva Research and S&P Global Market Intelligence. Imports in the first four months of the year actually had declined 5.2 percent, leading to speculation from Panjiva that the late burst may have been caused by "concerns over duties on imports from China."

"Should duties eventually be forthcoming leading buyers from China including Jake’s Fireworks, American Promotional and Phantom will need to decide whether to raise consumer prices or try and find alternative supplies," Panjiva reported.

Source: Panjiva, S&P Global Market Intelligence

Industry professionals, though, say the jump in imports may have come from seasonal factors as well as a delay in exports from earlier in the year.

Mike Baker, general counsel at Jake's Fireworks, said he remains optimistic that the industry will escape becoming a casualty in the U.S.-China trade skirmish.

"No one likes tariffs on their products," Baker said. "It's a remote possibility. What they're looking for is something with a constant and immediate feedback. Tariffs on fireworks now wouldn't have any impact until next season. All our imports for this season are in place."

However, distributors have seen the headlines of what other companies hit hard by the tariffs have been doing. Should the industry be targeted, they'll likely pass the costs on.

China provides most of the imported fireworks to the U.S. — 94.7 percent of the $273 million in total imports through April, according to Panjiva and S&P. The country exported $719.7 million globally in 2017, or 85.6 percent of the global total; the U.S. by comparison exported just $6.8 million, according to WTEx.

"It depends on what it is. Probably we'd do what everybody else would do, and that's unfortunately pass it on to the consumer," Weimer said. "You read about [Harley-Davidson], and they talked about tariffs increasing the costs to their customers by a couple thousand dollars a motorcycle. That's a pretty hefty increase."

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