Some would call 2025 a transformative year for the promotional products industry. Others might describe it as volatile. Perhaps both can be true. But just about anyone in promo is more interested in what the future holds for the industry.
That’s why PPAI Research conducted a detailed, multi-study analysis to get the best sense of trends and accompanying predictions for the year ahead of us. The findings broke down into five core categories that distributors, suppliers and the entire promo community should be keeping a watchful eye on throughout 2026, because all five portend to play essential roles in this industry’s growth and challenges ahead.
*The data shared below reflects insights from PPAI 100 Sales Bimonthly Insights, U.S. Distributor Sales Volume Study, Product Power consumer research, end buyer surveys and LEAD ECHO discussions, with select external references from McKinsey and BCG.
Final numbers may vary slightly, as some datasets were still being finalized at the time of publication. Findings represent input from companies accounting for more than 60% of total promo industry revenue.
Trend 1: Demand Is Stable, But Margins Are Tightening Across The Industry
The frustrations hitting the promo community have less to do with promotional products and their impact on consumers and more to do with external factors on business. Stable demand but shrinking profitability have been an increasing trend lingering into 2026.
Nearly half (49%) of suppliers and 30% of distributors reported margin declines over the past year.
- Cost pressures are adding up, and more than half of companies (56.8%) have identified tariffs and duties as their biggest margin challenge, along with rising freight expenses (54.3%) and reduced client budgets (50.6%).
- This is also creating operational pressure, as 30% of suppliers report an increase in rush orders.
With economic pressure still elevated, margin relief is not expected in the near term.
Alok Bhat
Market Economist, PPAI’s Research & Public Affairs Lead
Prediction: Margins will remain tight in 2026, and efficiency will become a firm’s most important advantage.
We have seen in 2025 that buyer behavior is shifting, and those patterns are likely to continue as long as the external pressures remain.
- 60% of buyers cut quantity first when budgets tighten.
- Only 11% cut customization
- Consumers judge value by durability (70.4%), design (65.2%) and material quality (58%)
When demand remains stable and protecting margins is the goal, small improvements to efficiency can have measurable impacts. From strengthening pricing discipline to automating repetitive administrative tasks to streamlining quoting and order-entry workflows, all of these become essential to compensate for external factors.
“As costs rise and expectations grow, efficiency becomes the new path to profitability,” says Alok Bhat, market economist and PPAI’s research and public affairs lead.
Trend 2: Tariff Volatility Has Become The Industry’s Biggest Planning Challenge
It could be argued that much of what firms are contending with in the previous trend stem from the current dynamic with tariffs. In general, tariffs have always influenced product costs, but in the past year they have become something far more disruptive and, ultimately, flat-out unpredictable.
Beyond the tariffs themselves, the problem in 2025 really became an issue of unpredictability. Tariffs were threatened, walked back and sometimes enforced, then changed again.
More than half of suppliers have moved part of their production into regions such as South America, India, Mexico or domestic partners in order to reduce exposure to China. Many discovered that diversification became complicated when countries like Vietnam and Cambodia were later hit with new or higher duties. What was meant to reduce risk often introduced new forms of risk, making long-term planning harder.
Suppliers report more inspection holds at Customs, more documentation reviews and more midstream reprocessing when tariff codes shift during production.
The federal government’s proposed Section 301 action on shipbuilding is a perfect example. It was originally set to be a $1 million fee for every U.S. port entry made by any China-built ship, regardless of ownership, before being suspended following objections from PPAI and a broad coalition of affected parties and industries.
Prediction: Tariff volatility will remain the industry’s biggest planning challenge in 2026.
While some lobbying partners report that tariff swings will be less severe in 2026 than they were in 2025, current signals suggest that uncertainty will continue through this year. According to recent discussions with PPAI’s government affairs advisers at Thorn Run Partners, several tariff actions are now in active negotiation at the federal level and policymakers are signaling interest in a more calibrated approach that avoids sudden shocks to import-dependent industries.
“Tariff volatility has become a planning challenge rather than a cost challenge,” Bhat says. “In 2026, the firms that build flexibility into sourcing and pricing will stay ahead.”
Trend 3: A Buyer Shift Is Happening Toward Retail-Style Products With Better Design
Low-value items that can be tossed away without a second thought are no longer in demand, according to the data. Instead, the majority of distributors are reporting an increased demand for durable products that feel intentional in design.
According to a survey of PPAI 100 distributors, buyer demand has prioritized across the following lines:
- 78.7% of distributors report rising demand for better designed retail-style products.
- 70.4% say durability is the strongest signal of product value.
- 65.2% say modern design drives perception.
- 58% say material quality shapes whether an item feels worth keeping.
The data shows this even more sharply when buyers have to make difficult decisions. In fact, when budgets tighten, organizations tend to reduce quantity instead of reducing quality or customization. Data from the U.S. Distributor Sales Volume Survey shows that 60% of buyers cut quantity first, while only 11% reduce customization.
Amid all of this, direct sourcing seems to be a growing trend among distributors.
RELATED: Product Power 2026: What Consumers Want Next
While industry suppliers still receive about 84% of total distributor spend, 32.6% of distributors report increasing their use of non-industry suppliers or direct sourcing for lifestyle categories, niche apparel, retail-aligned tech accessories and custom- designed items.
Prediction: Better designed, retail-style products will lead buying decisions in 2026.
This prediction is not about luxury. It’s about thoughtful design, emphasizing durability, curating modern products and elevating decoration, personalization or packaging. The data suggests that buyers would rather have a little bit of these things than a lot of something forgettable.
Trend 4: AI Is Finding Its Way Into Promo’s Workflow
With promo companies growing and needing to maximize efficiency, many have moved past the experimentation phase when it comes to artificial intelligence. Now, they have fully integrated elements of the technology into their everyday workflows.
Recent PPAI insights suggest that nearly a quarter of participating firms said that AI was already part of their internal processes, and more than two-thirds of firms (69.2%) said they were somewhere in the onboarding process when it came to AI technology.
RELATED: Promo’s AI Challenges And Opportunities
Areas like marketing and artwork show the biggest gains in terms of incorporating AI. In these fields, the technology can speed artwork cleanup, proofread for errors and support creative output. Operational teams are using AI to streamline quoting, assist with product research, improve order accuracy and reduce manual administrative work.
Prediction: AI will become a standard operating layer for promo firms in 2026.
PPAI Research does not predict that AI will effectively replace people, but these tools can be wisely incorporated, especially into numerous small tasks that will add up to increase efficiency for companies that are operating on a large scale or want to be.
Five core workstreams that firms can expect AI to become more prevalent across include:
- Artwork and Design: instant cleanup, layout options, mockups and brand aligned templates
- Marketing: campaign messaging, visuals, proposals and content tailored to buyer needs
- Operations: quoting support, workflow automation and reduced rework
- Sales Enablement: faster proposals, product research and more accurate sourcing insights
- Forecasting and Personalization: smarter inventory planning, demand prediction and scalable personalization
Trend 5: Sustainability Is Growing In Tandem With Compliance Demands
Sustainability trends are difficult to pin down precisely. There is no question that sustainability will continue to rise in 2026, but it may not be evenly across the board. The biggest gains will take place where regulation plays a larger role.
That’s not to say that consumers are not passionate about the ecological effects of their products. Our Product Power consumer research for 2026 revealed as much:
- 76% of consumers say sustainability influences whether they keep or use a product.
- 49.3% say it increases their trust in the brand behind the item.
- More than 62% prefer products made from recycled or eco-friendly materials.
- 27.9% say a product that is perceived as “not sustainable” feels cheap or low quality.
But those consumer sentiments are not necessarily lining up with buyer requests, at least according to PPAI’s 2025 distributor research:
- Only 33.3% of distributors say clients regularly ask for sustainable options.
- 54.2% say ESG or product-origin questions are still rare.
Elizabeth Wimbush
Director of Sustainability & Responsibility, PPAI
At the moment, supplier feedback mirrors this:
- Only 17.5% of suppliers say sustainability is a top buyer priority.
- 22% say they are not seeing sustainability requests at all.
- However, when requests do appear, they cluster in high-visibility categories such as bags (21.6%), apparel (17.6%) and drinkware (17.6%).
But if the sustainability trend is not accelerating sustainability efforts in promo, compliance is. Just over one-third (34.4%) of suppliers report increased requests for documentation, testing, PFAS disclosure and ESG materials.
Prediction: Sustainability momentum will be strongest in areas with regulatory exposure, higher brand scrutiny and formal ESG documentation requirements.
A trend is one thing, but regulation is just about unavoidable once it’s set in motion. Promo firms have proved to be adaptable and able to comply with reasonable standards. PPAI expects firms to be in a position to focus on:
- Verified materials and testing, especially where PFAS or chemical restrictions apply.
- Responsible packaging, driven by EPR laws and corporate sustainability goals.
- Traceability and documentation for government, healthcare and ESG-sensitive buyers.
- Durability and reusability, which support both environmental impact and brand perception.
- ESG-aligned gifting and onboarding, where sustainability increasingly appears in RFPs.
“Based on validated, third-party research, PPAI will focus in 2026 on providing more accessible tools and education for our members on the regulatory risks they face in the sustainability space, as well as case studies to leverage the success of initiatives in circularity, carbon reduction strategies and material innovation,” says Elizabeth Wimbush, PPAI’s director of sustainability and responsibility.
Auping is the senior news editor at PPAI Media.
