To be a branded merch supplier going into 2026 means navigating the uncertainty of the present and immediate future while still trying to forecast the ramifications of the more distant future. What suppliers are affected by – and the choices they make in the face of those external factors – have an impact on the entire promotional products supply chain.

PPAI Research surveyed PPAI 100 suppliers to get a sense of where relevant topics are hitting them and their current stance on the issues.

  • Tariffs and trade policy are undeniably front and center for suppliers at the moment, with nearly 90% claiming to be dealing with some sort of negative impact and a worrying 42% saying that it has created a major cost and margin strain, making it the most disruptive external factor of 2025.

Suppliers Affected By Tarriff or Trade Policy:

The question then becomes; how do suppliers handle the additional costs that result from the tariffs that we’ve seen implemented in 2025 or the logistical challenges that have come out of trade uncertainty? Data from earlier in 2025 had shown suppliers struggling with growth more than distributors, which suggests they were potentially absorbing much of the costs of tariffs. That always seemed potentially unsustainable.

  • 58% of suppliers claim they still attempt to absorb some costs in order to stay competitive in a price-sensitive market.
  • However, at this point, 78% are passing costs downstream to distributors.

Supplier Response to Tariff & Cost Pressure:

“Amid uncertainty, suppliers are balancing cost-passing, cost-absorption and sourcing shifts to stay competitive under tariff pressure,” says Alok Bhat, market economist and PPAI’s research and public affairs lead.

AI Adoption Going Forward?

Nearly 70% of PPAI 100 suppliers are already using or testing AI, signaling a shift toward faster, more automated workflows in 2026.

The data can break that down into more realistic terms for the technology’s current place in the industry.

  • A quarter of suppliers (26%) have already integrated AI into production, order processing or workflow automation.
  • 42% would consider themselves actively testing the technology by way of quoting, design forecasting and customer service,
  • 20% claim they are planning to adopt AI in the next 12-18 months.
  • 13% say they have no immediate plans for AI.

PPAI 100 Suppliers’ Use Of AI:

Going forward, automation will be an interesting place to watch. With tariff volatility and market uncertainty likely persisting in the short term, key decisions and flexibility will be needed, which requires a human touch. These are qualities AI cannot necessarily replace.

However, with rising prices shrinking margins, small efficiencies will become more and more important for firms, which automation can be a game changer for when it comes to tasks that complement humans without replacing them. Striking that balance may be key.