News / US Independence Day fireworks dimmed by tariffs

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This Independence Day might not be so independent for patriotic Americans who rely on China for the vital components of a traditional 4 July celebration.  

As many US importers seek to diversify their supply chains to avoid paying heightened tariffs, new data from McKinsey has revealed that some sectors may find this more of a challenge than others. 

According to McKinsey, commodities that are almost impossible for US importers to source from anywhere other than China include fireworks, charcoal barbeques, metal and wooden ornaments, LED lightbulbs and electric fans. 

The consultancy ranked the country’s imported goods between 0 and 1.25, where the lower end of the scale indicates it would be easier to source those goods outside of China and higher ratios indicate fewer sourcing alternatives.  

35% of US imports from China have a ratio less than 0.1, meaning the global available export market for these commodities is 10 times larger than what the US currently imports from China.  

Those in the business of textiles, taps and valves, packaged retail medicines or plastic footwear will find “the great trade rearrangement” a walk in the park. “Cotton t-shirts? Fairly easy. Fireworks? Impossible,” said McKinsey. 

The average ratio is around 0.4, “but the figure varies widely across sectors”.  

It is the lowest for pharmaceutical products at roughly 0.03, while the midrange – between 0.3 and 0.5 – is represented largely by electronics and textiles. 

The highest product ratios of more than 0.9 are mostly made up of ‘other manufacturing’ – “A catch-all category encompassing products from yoga mats to staplers to lawn furniture to knitting needles. These products are often contract (made-to-order) goods,” explained McKinsey. 

It noted that fireworks fall into the 5% percent of US trade with a ratio greater than 1.0, along with rare earth magnets. For these commodities, US imports from China exceed available global exports. 

Fireworks are a $2bn industry for the US, 99% of which comes from China. This has led to fears that tariffs will mean displays this holiday weekend will either be modest or costly. 

The New York Times reported that the National Fireworks Association and the American Pyrotechnics Association have been pressuring the Trump Administration to give their sector a relief from tariffs by making the case that “fireworks are a symbol of American Patriotism that should not be taxed”.  

“John Adams envisioned that America’s independence should be commemorated with ‘pomp and parade, with shows, games, sports, guns, bells, bonfires and illuminations,” the associations wrote to Trump in April. 

“An exemption for fireworks will allow businesses to continue with their plans to have enough affordable inventory for Americans to participate in and enjoy this historic occasion.” 

But while the US may not be so independent in sourcing its Independence Day essentials, in general there has been a significant shift away from its reliance on China. 

McKinsey data shows that US imports from China fell by about 20% and more than $100bn between 2018 and 2024, during which time total US imports rose by almost 30%. 

“Recent events may accelerate this realignment,” it said.  

“Without a shift to different sources, prices may rise, and US companies and consumers might need to reduce—making do with fewer products or inputs—or replace, substituting one product for another sufficiently similar one. 

“The higher the tariffs, the more significant the potential reduction or replacement,” concluded McKinsey.