- The Washington Times - Tuesday, July 2, 2019

James Lynn, sporting an orange TNT T-shirt and baseball cap, bustles around his New York Avenue fireworks stand near the D.C. line with Maryland on a humid early July day as he helps customers pick out sparklers, Jumbo Purple Rains and Bright Star fireworks as cars roar ceaselessly past nearby.

While the smoky haze from July Fourth fireworks displays Thursday will soon dissipate, the fog of uncertainty that has descended over Mr. Lynn and the rest of the U.S. fireworks industry will likely linger as long as President Trump’s trade war with China remains unresolved.

The fireworks industry may be uniquely dependent on good U.S.-Chinese trade relations, with an estimated 93% of all U.S. fireworks coming from China — and Hong Kong ranking as the second biggest exporter. Tariffs present entrepreneurs such as Mr. Lynn with unpalatable alternatives: raise prices, try to wrangle concessions from Chinese suppliers or take a hit to profit margins.

“Without China, in our little industry, I don’t know what we’d do,” said Steve Houser, secretary of the Kansas City-based National Fireworks Association and owner of the wholesale fireworks company Red Rhino Fireworks in Joplin, Missouri.

In May, Mr. Trump threatened to put tariffs of up to 25% on some $300 billion more in Chinese exports that would have gone into effect Monday. After the Group of 20 summit in Japan, Mr. Trump said he would not increase or add to the existing tariffs on China while negotiations continue. The suspended tariffs included higher import duties for the fireworks industry.

Leading up to the Fourth of July, Mr. Lynn, who has operated from the prime New York Avenue location in Northeast Washington for nearly 30 years, said business has been better than in years past, but even the reports of trade uncertainty and potential tariffs have caused prices to rise. Mr. Lynn expects another busy July 3 as people come to buy last-minute fireworks for their celebrations.

“Our distributor’s already been raising his prices this year in anticipation of it. So I know on our end our prices for our fireworks have gone up already,” Mr. Lynn said. He said he did not raise prices for his customers.

Over the course of 20 years, fireworks have been a growth industry. Display fireworks revenue has climbed by $219 million, while consumer fireworks revenue has risen $661 million, according to the American Pyrotechnics Association.

James Peters, a retired D.C. firefighter who owns Capital Works Inc., one of the only wholesale fireworks sellers in the District, said his family-run business has about 25 to 30 vendors who buy from him.

Because of market fluctuations, Mr. Peters said, some of the stock he bought this year cost more than it had — even before tariffs were imposed.

“You can put [tariffs] on hold. That means nothing. You can go back to shaking hands and say, ‘It’s OK, everything’s fine,’” Mr. Peters said. “I doubt my price will go back to my November or October purchase price.”

Cutting back

Because of price increases, Mr. Peters was not able to buy as much firework stock as he has in years past. He said he has sold out of certain fireworks even before one of the busiest days of the year.

“We’re not going to order any more because we can’t sustain the increase,” Mr. Peters said. “I’m not ordering any more stuff. We’re done.”

Mr. Houser of the National Fireworks Association said he heard the news about the postponement of tariffs after a meeting between Mr. Trump and Chinese President Xi Jinping while he was sitting in his office at 1 a.m. last week.

“I’m very happy to see that at this point it has been delayed because at the end of the whole discussion, I have nowhere else to go as a fireworks importer,” he said.

Mr. Houser said he talked with many fireworks retailers and vendors across the country leading up to July 1. He said they asked him whether they should raise the prices of their fireworks because of the trade tensions and potential tariffs. Mr. Houser said his prices did not rise this year because of the potential tariffs, but he told retailers that might not be the case next year.

“If the tariff actually happens, then you can rest assured that come next time around, and even this fall, there will be a price change to reflect the tariff and its effects,” Mr. Houser said.

The National Fireworks Association is a nonprofit organization dedicated to advocating for the safety of consumer fireworks. More than 1,200 small businesses make up the member companies that operate in the U.S.

“I can’t sit and wait and figure out what’s going to happen. I have to order my stuff more than a year in advance with the hope of getting it,” Mr. Houser said. “So, things like tariffs and this discussion for my industry are very significant because I have nowhere else to go.”

In a June 14 letter to U.S. Trade Representative Robert Lighthizer, American Pyrotechnics Association Executive Director Julie Heckman wrote that 99% of backyard consumer fireworks and 75% of professional display fireworks sold in the U.S. come from China.

The letter argued that the removal of fireworks from the list of proposed tariffs because they would hurt the livelihoods of small family businesses that make up the membership of American Pyrotechnics Association and the “millions of families and thousands of municipalities across our great nation celebrating our Independence Day.”

Even with Mr. Trump’s pause on new tariffs, the fireworks industry will be bracing for potential cost increases.

“It’s unfortunate that it’s come down to this, but we’re in America and that’s the free market for you. It ebbs and flows,” Mr. Lynn said. “It’ll right itself eventually.”

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