Dear Valued Customers,

We hope the year is off to a strong start for everyone. We are reaching out to update you on recent changes in tariff regulations in the United States and how they may impact our operations.

As you may know, the tariff landscape has been constantly evolving, with frequent updates and adjustments. We are actively monitoring these changes to ensure that we remain informed and can quickly adapt to minimize any potential impact on our business and our valued customers.

Our primary goal is to manage tariff costs without placing an undue financial burden on you. We understand the importance of maintaining fair, competitive pricing, and we are dedicated to transparency regarding how these adjustments may affect you. While we will work hard to limit the number of price changes due to tariff rates, the current political climate may lead to unavoidable adjustments in the near future.

Here are some of the challenges we are facing:

• February 4, 2025: IEEPA 10% additional tariff added to goods from China and Hong Kong and take effect immediately; these are in addition to Section 301 tariffs already in place
• February 11, 2025: Section 232 tariffs reinstating the full 25% tariff on steel imports and increasing tariffs on aluminum imports to 25%, but some exemptions apply
• With the above additional tariffs, we announced a price change in February 2025 that would take effect May 15^th, 2025, to give everyone 90 days advanced notice
• March 3, 2025: IEEPA 10% additional tariff added to goods from China takes effect immediately, this is in addition to the first 10% on 2/4/25
• April 3, 2025: Reciprocal tariffs are enacted that are country-specific. China is 34%, while India is 26%. Some exemptions apply and are product-specific. Customs and Border Patrol (CBP) issued a document called Annex I, which is the "Country-Specific Reciprocal Tariff Rates,” while the published document Annex II lists the HTS Codes that are not subject to reciprocal tariffs. Annex II is 37 pages of HTS listings that are exempt from the reciprocal tariffs.

Along with everyone else, we are trying very hard to understand what all these changes actually mean. Once any of these tariffs are announced, we wait for CBP (aka 'Customs”) to issue the actual wording of how the tariffs will be implemented. This takes some time for them to complete, usually a week or two.

Meanwhile, the normal government sites where these rates can be verified are hopelessly behind on being updated, so there is no place to check the actual rates for any product that is up to date. Paging through the written documents and hoping you don't miss something in the current operation.

While our brands ProTie and ShowMe Ducks only have 3-5 Harmonized Tariff Schedule (HTS) codes to verify, our brand Hot Max has over 100 HTS codes to verify before the new price list can be finalized. These only include the items we directly import and do not include our other suppliers that also import products.

As you can see below, the tariffs are changing again between 4/8/25 and 4/9/25.

This is an example breakdown of one specific HTS Code