Tariffs Hit Hard, But Experts Urge Investment Amid Uncertainty

"I’ve never seen language like this on a survey," Andy Paparozzi, chief economist at PRINTING United Alliance, says.

The survey Paparozzi points to is the most recent State of the Industry Report, “Turning Uncertainty into Opportunity,” produced by Alliance Insights and sponsored by Canon U.S.A. The report features results from the State of the Industry Panel, which consists of more than 300 companies in the printing industry who regularly participate in Alliance surveys, with this one in particular focusing on the uncertainty created by recent tariff policies. Paparozzi explains that a deep passion regarding this topic — both for and against the tariffs — resulted in the “colorful language” used in some of the responses. With a topic eliciting such passion, it’s reasonable to question if the results could be unbiased, one way or the other. Paparozzi says yes.

“Approximately 35% of the participants in our survey say, over the long term, these tariffs are the right thing to do. They balance the playing field,” he says. “To quote one of them, ‘They make it easier and fairer for us to compete with offshore providers. And over the long term, they will revitalize American manufacturing.’”

And while 35% believe tariffs will have long-term benefits, the numbers show that the road ahead will be challenging. One of the most compelling statistics from the survey, Paparozzi notes, is that “27% of the industry panel report they have increased pre-tax profitability this year, while four times as many — 73% — report profitability has decreased, or at best, been flat. So, whatever long-term benefits the [tariffs] have, whether they’re right or wrong … they have hit the industry very hard.”

Harsh Reality

While some PSPs see the tariffs as a positive for the industry, some challenges and concerns cannot go unstated.

One of the most significant effects Marco Boer, vice president of I.T. Strategies, notes is the impact of unbudgeted tariffs, which could be potentially devastating.

“For example, we have a friend who bought a $6 million offset press and they were hit with a $1.2 million charge in tariffs,” he says. “This is leading a lot of commercial printers to delay because the irrational fear in life is that if they wait and the tariff drops from 20% to 10%, then they’ve just wasted $600,000 that they didn’t need to waste.”

Paparozzi also points to this as a concern, noting that it’s natural to want to delay investments when there is uncertainty, but this puts a company at risk of falling behind.

“One of the most troubling statistics we have in this report is that 59.1% are delaying or may delay capital investment because of the uncertainty,” he says. However, he emphasizes that that poses a risk. “When the turning point comes and things start moving up again, you can’t participate, you can’t catch up.”

According to the State of the Industry panelists that participated in the survey, the No. 1 concern heading into the second half of 2025 is the possibility of a sharp slowdown in the economy or a recession caused by the uncertainty created by the “erratic tariff policy,” Paparozzi notes. The second is the uncertainty that the tariff policies are creating and the effects on operating costs and profitability.

“Right now, there’s no question that they have hit the industry hard and created a classic textbook profit squeeze,” he says.

Infrastructure is another challenge. While it’s a positive if tariffs bring manufacturing back to the United States, it will be difficult to ensure the necessary resources are in place.

“We don’t have the ecosystems in place here in the U.S. to do manufacturing,” Boer notes. “You could assemble things, but you’re not going to be able to buy the widgets that go into the product because they’re just no longer made in the U.S., and they won’t be. It would take a decade to establish.”

Beyond that, there are also issues of power, people, and places.

“Our electricity grid can barely support the economy as it is,” Paparozzi points out. “Never mind when we’re talking about AI [artificial intelligence] in the data centers. We’re going to have to dramatically increase our electricity grid. And [there’s also] labor supply. Where are we going to get people to staff additional manufacturing facilities? That’s where we got into the whole issue of smart robotics. In terms of restructuring supply chains, dramatically upgrading the electricity grid, and through investments in robotics or very strong trade school programs, we have to have the personnel necessary to support additional manufacturing.”

The impact could be severe for some segments, especially those dependent on imported consumables, Boer says.

“I think this is going to accelerate the decline of low-value stuff,” he says. “You might see compliance statements disappear overnight. And that’s the risk in our industry. It’s no longer projectable. It’s not a nice, gradual decline; you’re gonna have cliffs, where things disappear overnight. The tariffs will accelerate that.”

Invest for Success

Although both Boer and Paparozzi note that some PSPs are going to wait out the uncertainty before making any investments, both say that it’s crucial to invest now for future success.

“You’ve got to increase your efficiency and your revenue per worker,” Boer says. “You have to invest to reduce your ongoing run rate cost.”

And, as an ancient proverb says, this (disruption) too shall pass.

“It’s a matter of knowing that with every disruption, there comes a turning point,” Paparozzi says. “Recessions end. Pandemics end. Disruptions caused by things like tariffs end. You want to be ready when things start going in the other direction; you want to be ready to participate in the upswing.”

In fact, Paparozzi says some of the survey participants noted they are using AI and other tools to strengthen their market analysis so they know when the turnaround is coming. Others stated they continue to advance their priorities and expand their capital investment, promotional, and product plans.

Investment is also one of the potential positive side effects of the tariff policies, Boer says.

“Because of these incredible pressures that are being put upon us, that will accelerate our transition to far more automation and efficiency,” he says.

Just don’t wait to make those advancements.

“Waiting for clarity is not the answer,” Paparozzi warns. “Creating clarity for your employees, for your clients … that’s what’s going to allow you to come out of this stronger than you went in.”

We Asked. You Answered.

We asked three PSPs that are part of the State of the Industry Panel and that participated in the “Turning Uncertainty into Opportunity” survey, sponsored by Canon U.S.A., to provide their thoughts on the tariffs and the impact they might have on the printing industry. The respondents explain how tariffs have impacted their businesses and share the strategies they’re employing to offset associated costs. All participants were asked if they thought the tariffs would have a positive impact, with answers ranging from yes to maybe to no. We selected one PSP from each perspective.

The Panel

Adam M LeFebvre, president, Specialty Print Communications, Niles, Illinois

Todd Ventura, president, Poor Richard’s Press, San Luis Obispo, California

Jonathan Wallace, president, Wallace Graphics, Duluth, Georgia

PRINTING United Alliance: Have you felt any impacts yet from the tariffs?

Adam LeFebvre: [There have been] minor impact on costs, but they’re definitely affecting customers in various ways. We did have a major equipment purchase that was changed significantly due to tariffs.

Todd Ventura: The recent imposition of tariffs has had a measurable impact on both our operations and market confidence. On the supply side, we’ve seen notable pricing fluctuations and overall increases, leading to uncertainty in vendor negotiations and planning. However, the more pronounced effect has been on client sentiment. Many of our customers are taking a ‘wait-and-see’ approach, postponing purchasing decisions until later in the year due to economic and political uncertainty surrounding trade policy. This has created a highly polarized outlook: we’re either heading for a major surge in Q4 as demand rebounds — or we may face flat or even declining sales.

Jonathan Wallace: Yes, we’ve definitely started to feel the effects. We’ve seen noticeable price increases on inks, equipment, and merchandise — averaging about 7% across the board for Wallace Graphics. The impact was especially significant on our new Heidelberg press coming from Germany, where the tariffs added a meaningful cost burden. For non-consumables or one-time purchases, the effect is less obvious, but anything that’s repeat or mission-critical to production definitely gets magnified.

Alliance: If not, do you anticipate you will?

LeFebvre: The biggest issue will be seen in equipment. This could be very costly long-term. It will definitely squeeze equipment manufacturer margins and ultimately will either be absorbed into longer amortization schedules for equipment or higher rates to the end user.

Wallace: Even for those who haven’t felt direct tariff increases, I believe the broader ripple effects are already underway — primarily through inflation. These added costs may not hit all at once or show up on a single invoice, but they’ll inevitably trickle through the supply chain. And while much of it will be passed along to consumers, not all of it can be — so it becomes a margin game.

Alliance: How are you preparing to offset the costs associated with tariffs?

LeFebvre: [We will] continue to focus on our core initiatives that stress innovation and efficiency. We do not have the luxury of simply raising prices without at least a significant effort to reduce cost efficiency.

Ventura: We are actively sourcing alternative vendors in regions that are unaffected — or minimally affected — by current tariff regulations. For instance, several products currently sourced from Myanmar will be transitioned to production facilities in Vietnam to take advantage of more favorable trade conditions. In parallel, we are leveraging our buying power to negotiate improved terms with existing suppliers. Where feasible, we are also shifting procurement to domestic alternatives, especially when quality and availability align with our standards.

On the customer-facing side, we are refining our value proposition by emphasizing product and service premiums — specifically quality, speed, and unique offerings. We’ve implemented a tiered pricing model to rationalize incremental price adjustments and provide transparent value to our clients.

Operationally, we’ve conducted a thorough review of our logistics network, identifying opportunities to reduce shipping costs. This includes strategically “ganging” orders to consolidate shipments and lower overhead. In line with this, we have also reduced inventory levels to remain agile and take advantage of emerging pricing opportunities. To support this transition, we’ve launched a comprehensive client communication plan. This initiative educates our customer base on the macroeconomic pressures affecting pricing and supply, while also offering early-purchase incentives designed to create a sense of urgency and encourage decision-making ahead of anticipated market shifts.

Wallace: Our strategy is multi-pronged. First and foremost, we’re focusing internally — driving operational efficiency, reducing waste, and investing in automation across departments. At the same time, we’re actively exploring alternative sourcing, whether that’s domestic suppliers or countries not subject to the same tariff structure. Where appropriate, we are passing through cost increases to our customers, but we’re careful to do it responsibly by balancing transparency with competitiveness. Growth in top-line revenue also helps soften the impact as we scale.

Alliance: You noted that you think the tariffs will not have a positive impact. Could you elaborate on that?

LeFebvre: Globally, I’m not opposed to the concept, although I’m no economist. Above lays out some of my thoughts. It’s a reordering of the economy for sure. Some will navigate with little stress. Others will struggle and cry mercy. The impact on the U.S. economy short and long term remains to be seen. I think it really connects to whether or not we can live with a little less, and if on-shoring will create jobs and American opportunity, or will simply stall out and create more costs.

Alliance: You noted that the tariffs may have a positive impact. Could you elaborate on that?

Ventura: The current tariff environment is prompting our company to take a deeper look at our sourcing strategy across all categories. This reflection is encouraging us to seek out new supplier relationships in regions we hadn’t previously considered. For example, although we had never sourced from India before, we are now actively engaging with Indian manufacturers as a direct response to tariff-related challenges. This pivot is likely to result in greater long-term supply chain stability through a broader and more diversified network of partners.

Over time, the evolving trade landscape may also incentivize domestic manufacturers to reestablish production facilities in the United States. Such a shift would enhance supply reliability while reducing lead times and lowering freight costs as a percentage of total product cost. Functionally, this dynamic enables us to redefine our value proposition by focusing more on speed, quality, and service rather than competing solely on price. It positions us to deliver greater responsiveness and reliability to our customers, which we believe will be a meaningful differentiator in a disrupted market.

Additionally, government responses to tariffs often include measures such as price relief, tax incentives, and investment credits. Where applicable, we intend to take full advantage of these programs to offset cost pressures and reinvest in growth initiatives.

Ultimately, one of the most significant advantages may be the opportunity to purchase American-made goods, which not only reduces freight and lead times but also aligns with broader economic and sustainability goals.

Alliance: You noted that you think the tariffs will have a positive impact. Could you elaborate on that?

Wallace: While painful in the short term, I believe the long-term effects of tariffs could be constructive. They’re forcing companies like ours to diversify our supply chains and reduce dependency on any single country or vendor. That resilience will be a competitive advantage. Tariffs also level the playing field, giving U.S. manufacturers a better shot when competing on price, especially for large-scale or time-sensitive jobs. And perhaps most importantly, they’re accelerating investment in automation and innovation by pushing us to rethink workflows and future-proof our operations.