BIA is closely examining the potential effects of new tariffs on local advertising. Tariffs increase prices and disrupt local economies, prompting businesses to reassess their marketing budgets.
In a new series of reports, we explore how the Trump administration’s trade policies may force businesses to rethink their local advertising strategies, tracking possible changes in advertising spending.
Our first report, “Understanding Tariffs Impact on Local Advertising: Business Vertical Analysis,” focuses on the key industries of automotive, clothing retail, and furniture stores, where we anticipate significant changes in both traditional and digital advertising.
With tariffs imposed on Chinese imports, EU goods, and Japanese products, local businesses may feel compelled to reduce their advertising budgets to manage increased costs. This analysis is critical as companies navigate the complex landscape of international trade fees.
A recent survey by the Interactive Advertising Bureau revealed that 60% of advertisers expect a 6-10% decline in their ad budgets due to tariff-related pressures. Such a shift could reduce overall ad spending, strengthen the focus on performance-based campaigns, and move toward digital channels that provide better measurement capabilities.
For context, between 2018 and 2019, Trump’s 10% tariffs on certain goods resulted in a 2.3% increase in furniture prices*, as the Home Furnishings Association reported using Consumer Price Index data. Tariffs could be particularly harmful as the home goods sector grapples with high interest rates, a sluggish housing market, and ongoing ramifications from pandemic-related purchasing trends.
As businesses confront these challenges, innovative advertising strategies that maximize return on investment (ROI) will be more critical than ever. It will be essential to evaluate which advertising channels may become more effective under tariff pressures and to implement these strategies successfully.
The report offers more analysis, which can be found in the Guide and Insights section of BIA ADVantage. BIA clients can log in here. If you’re interested in this analysis, please email us at sales@bia.com to discuss it further.
*As reported by the Home Furnishings Association using Consumer Price Index data
