Would branded merch companies say they have “gotten used to” tariffs on foreign imports? Probably not, but they certainly have had a lot of time to adjust to what’s become an indefinite reality, as the threat of tariffs have come into the picture since early 2025 and wavered in size and reality since, making planning quite difficult in some ways.


With that context, PPAI Research surveyed PPAI 100 distributors and suppliers, asking them a range of different questions relating to tariffs to get a better understanding of how the dynamic is affecting operational factors, end buyer decisions, refunds and cost recovery and more.

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Supplier Insights

Unlike their distributor partners, suppliers have been combating tariffs on the front lines. Both the immediate costs and the uncertainty are something that they have to make decisions on immediately as well as try to forecast.

As you can imagine, there are plenty of ways tariffs can affect suppliers and at least 10 different operational impacts were reported by PPAI 100 suppliers. Most commonly, increased difficulty of holding prices and planning inventory have become issues for the majority of suppliers as of late.

Operational Impact of Tariffs on PPAI 100 Suppliers:

A big question that has whirled around ever since SCOTUS deemed certain global tariffs illegal is what would it mean for the hundreds of billions of dollars’ worth of refunds owed to importers? The unprecedented nature of the situation has led to quite a bit of confusion. Suppliers acted with no expectation for refunds and many of them absorbed much of the costs rather than passing them down to distributors, further complicating the matter of distributors now inquiring to them about whether they will get a piece of a potential refund.

  • Most suppliers are actively evaluating tariff refunds, but the progress has been cautious, and some are relying on advisors to navigate the complexity of the situation.
  • A significant share don’t expect material recovery from the process.

Supplier Reaction To Tariff Refunds:

“Tariff refunds are viewed more as a potential offset than a reliable lever, limiting their impact on near‑term planning and investment decisions,” says Alok Bhat, market economist and PPAI’s research and public affairs lead.

For much of the past year, we’ve reported through PPAI Research that distributors were growing at a faster rate than suppliers as the industry’s overall growth rate has been modest. There are obviously multiple factors that might go into that, but it’s hard to ignore tariffs as the elephant in the room. The costs hit supplier first, and they have to make the choice of whether to pass those costs downstream.

  • Nearly 40% claim to pass through some costs.
  • A comparable amount absorb most or all of the impact.



Suppliers Passing Tariff Costs Downstream:

Looking ahead, suppliers seem well aware that there is ongoing risk to supply chain. There’s something of a “hope for the best and prepare for the worst” attitude carrying forward through 2026. Plenty of strategies were reported by suppliers with “diversifying countries of origin” being the only one being employed by a majority of suppliers.

Supplier Strategies For Ongoing Risks To Supply Chain:

“Overall, actions reflect a shift toward flexibility and risk management rather than aggressive structural change,” Bhat says.

Distributor Insights

Figuring out how tariffs affect distributors is a little bit more like a game of telephone, but with more numbers and a lot more headaches. The impact is not direct, and not always immediate, but it is certainly real. It might affect some distributors differently than others as prices, customer decisions and lead time unpredictability are just a few challenges that could trickle down.

  • Increasing product costs from suppliers is the one obstacle that is facing the majority of distributors.


Operational Challenges Facing Distributors Due To Tariffs:

“Overall, tariffs are affecting distributors less as a supply disruption and more as a sales‑cycle and pricing confidence challenge, reinforcing disciplined quoting and selective deal activity,” Bhat says

To hear distributors tell it, end buyers are accepting eventual price changes that come as a result of tariffs but not without a certain amount of scrutiny and, at times, caution that slows down a process that had been smoother in previous years.

End Buyer Response To Tariff‑Related Price Changes:

“End-buyers are responding less with outright rejection and more by slowing decision‑making and increasing price sensitivity, reinforcing longer sales cycles and tighter quoting discipline,” says Bhat.

Earlier, it was discussed whether (and to what degree) distributors expect tariff refunds from suppliers. Further down the supply chain, it is considerably less likely that end buyers expect tariff refunds be passed down to them from distributors.

  • Only 10% of distributors said that it was “very likely” an end buyer would inquire about a tariff refund and 14% claimed it was “somewhat likely.”


Still, tariffs do create complications between distributors and end buyers. Communication has become a challenge. Some say the relationships remain strong, but others admit that communicating uncertainty is inherently an impossible task given the role distributors normally play.


Many distributors are still doing well despite these concerns, but the frustrations and inconvenience either add up to margin pressures or a signal of something that is unsustainable in the long term.

  • By far, the most common response (53%) to how to adapt to supply chain and pricing volatility is “using more preferred or trusted suppliers.”
  • Distributors have also overwhelmingly (71%) named “tariff predictability and trade stability” as the No. 1 cause that the industry needs to advocate for.


Taken in a vacuum, the effects of tariffs on distributors have not been drastic, but the uncertainty has been a point of frustration that has material impact. As suppliers continue to suffer, what gets passed down to distributors may increase.