Imports from Canada, Mexico, and China may soon be subject to steep tariffs under the Trump administration’s executive actions on trade, forcing education companies to evaluate a new set of risks and implications for their bottom lines.
While proposed tariffs on Canada and Mexico are delayed pending further negotiations, U.S. education companies are working to understand how any potential new hardline trade policies – or retaliatory export levies imposed by the affected countries – could disrupt their operations.
Even amid the confusing and at times contradictory messages coming out of Washington, there are strategies that can help companies navigate the new, tumultuous environment, advisors in the space told EdWeek Market Brief.
While providers of physical goods like textbooks and devices would likely bear the heaviest burden from tariffs, software companies in the space also need to be acutely aware of how the policy changes could affect their operations, as well as how they could have downstream effects on school district purchasing, they said.
“Uncertainty will be a condition within which we operate for the considerable future, so companies will have to adjust accordingly,” said Jim McVety, managing partner of First Step Advisors, a firm that counsels education companies.
Early in February, President Trump issued a slew of executive orders on trade and tariff policies which implement new import taxes on almost all goods coming in from China, Canada, and Mexico. While the tariffs on Chinese goods have begun to go into effect, the penalties on Mexican and Canadian imports are delayed until March 4 pending further negotiations with those governments.
In addition to import tariffs enacted by the Trump administration, U.S. companies that export goods could face the prospect of potential retaliatory tariffs that would send the prices of their offerings soaring in foreign markets.
Canada and Mexico have both threatened retaliatory tariffs on U.S. goods, which are also delayed pending negotiations. That could make the cost of U.S.-sourced educational materials skyrocket for districts and schools in those countries.
The large overarching challenge all education companies face moving forward, just as they did during the first Trump administration, is assessing which tariff threats are overblown bluffs being used as bargaining chips in international negotiations, and which may actually become reality.
Prepare. Don’t Overreact
While the impact of potential tariffs, and any retaliatory trade policies that follow, remains to be seen, there are actions K-12 vendors can take to proactively prepare for them.
Organizations should first cut through the noise and ensure company leaders aren’t getting overwhelmed or have a skewed perception of the threat of tariffs based on the flurry of often contradictory news reports and opinions coming out about them, said Matthew Caligur, a partner at law firm BakerHostetler who specializes in international trade law.
“It’s important to avoid tariff hysteria and not widely overreact to every announcement of a potential tariff,” he said. Education organizations need to “focus in on the regulations themselves, because that’s really where the rubber meets the road.”
One of their first steps, he said, should be to determine what their countries of origin are for the various components of the products they produce, so they know which could be affected by tariffs, and in what dollar amounts.
Companies in the K-12 space have to consider two things: How tariffs will affect their supply chains, and how they may raise K-12 school districts’ overall costs, said Caligur.
Construction is a large expense for school districts that could be affected if the costs of building materials rises. Two critical components, steel and aluminum, are often sourced from China.
School districts in the U.S. collectively devote billions of dollars to construction each year. Those projects are often paid for through school bond measures, which district leaders have traditionally used to devote to a diverse array of long-term priorities, including everything from STEM and arts programs to career-technical education.
“As a company that’s providing services to school districts, I think you have to understand that landscape,” he said. “Schools are going to be under intense cost pressure from a variety of sources.”.
Review Supply Chains and Agreements
As companies in the K-12 space work to understand how new or higher tariffs could impact their revenues and business operations, Caligur said the first move they should make is to dissect their supply chains for exposure to new costs.
“A company may be doing business with a U.S. supplier, but if [that supplier’s] products are coming from another country, it’s important to know and understand that,” he said.
The complex layers built into global supply chains are another reason it’s difficult to ascertain how much any one industry, like education, can expect to see costs rise.
According to the National Center for Education Statistics, school districts in the country spent an estimated $3.4 billion on textbooks in the 2021-22 school year. But a 10 percent tariff on those expenses doesn’t necessarily equate to an additional $340 million in costs, Caligur said, since books and their components have sources in different countries that may not be subject to the same trade policies.
Once a company has greater visibility into any supply chain disruptions, they need to evaluate other possible sourcing opportunities to mitigate potential cost increases, he said.
They also need to review any existing supply agreements with vendors to assess if they spell out who is responsible for tariffs, or cost increases due to changes in trade policies.
“Not all supply agreements are created equal,” Caligur said. “The terms can vary widely from agreement to agreement, so it’s really important to understand what you’re dealing with there.”
If education companies can’t find alternate sourcing for products and are faced with paying increased tariff costs, they should also set a plan in place to adjust their pricing. They will need think more broadly about whether they would be able to absorb the costs of increased tariffs by reducing their profit margins, or if they would need to pass those costs onto their school district customers.
All education companies should be following this.
Sara Kloeck, vice president of education and children’s policy at the Software Information Industry Association
He suggests companies in the space stay on top of current developments and partner with people who are paying particular attention to those areas. For an education company, that could include public policy professionals, customs brokers, or outside counsel.
Retaliatory Tariffs Hard to Predict
Retaliatory tariffs also remain a threat to education companies that sell products outside out of the U.S., including to Canada and Mexico which have both threatened to put hefty import taxes on U.S. goods if Trump’s tariffs go through.
Canada’s now-delayed retaliatory tariffs would include a 25 percent import tax on U.S.-sourced goods including paper products. Mexico has also threatened tariff retaliations, but has not offered specific rates or products that would be subjected to them.
It’s difficult to predict what retaliatory tariffs might look like, and thus how companies should prepare for them, partly because they could vary from country to country and industry to industry, Caligur said.
But there are signs that many education companies see the targets of the Trump administration’s tariffs as attractive markets.
According to an EdWeek Market Brief survey conducted in August and September 2024 by the Education Week Research Center of 230 representatives of education organizations serving schools, 54 percent currently do business in the Canadian education market and another 10 percent are aiming to enter it in the future.
Similarly, 30 percent currently sell products in Mexico and another 6 percent said they have ambitions to enter that market.
Caligur is cautiously optimistic that any retaliatory Canadian and Mexican tariffs will be “relatively short-lived,” as the United States–Mexico-Canada trade agreement is up for renewal in 2026. He expects all sides to ultimately reach an accord and return to a status quo of relatively cooperative trade partnerships.
“Our trade relationship with every country is different,” he said.
The interplay between China and the U.S. is more complicated and tougher to predict, for example, because the countries’ positions seem to shift “wildly from day-to-day and week-to-week,” Caligur said.
The EdWeek Market Brief survey of K-12 business officials last year found that about a quarter say they serve the Chinese education market (24 percent), with similar amounts saying they operate in India (24 percent), South Asian markets other than India (26 percent), Australia (27 percent), and Asian markets other than China (29 percent).
Maintain Forward Motion
Even as companies in the education space work to understand their potential exposure to tariffs, they shouldn’t seize up or freeze plans that have been in the works, said McVety.
The districts that companies serve are likely to be facing their own financial challenges, as they cope with the loss of ESSER dollars, the Trump administration’s threats to cut to federal education spending aid to school systems out of step with its policy goals, and overall economic uncertainty. But K-12 vendors shouldn’t slow down, McVety, of First Step Advisors said. It’s more important than ever to take proactive steps to support the company and its goals.
“[Education] companies really can’t afford to take a wait-and-see approach, because that’s anathema to innovation, and that’s what our whole industry is built upon,” McVety of First Step Advisors said. “They have to continue ideating and strategizing, and part of that strategizing centers on what to do with the wait-and-see mindset that is likely to pervade schools.”
The question organizations in the space now face is how to continue to innovate and maintain forward motion in a climate where schools are “battening down the hatches,” he said.
One company McVety works with, a U.K.-based provider of both print and digital supplemental materials, is trying to positions itself to manage disruptions by reevaluating how it manages its North American territory.
The company currently has a fulfillment center based in the Northeastern U.S. that has exclusively housed its North American operations, and has historically served Canada and Mexico. But it is now sizing up opportunities to split operations and open separate centers in the two countries to serve customers locally and avoid tariffs on imported goods or retaliatory tariffs on exported goods.
Those pivots represent “the kind of conversations that companies are having in all sectors,” he said.
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The tariff policies that have been floated by the Trump administration could potentially affect companies and schools in unexpected ways.
For the education industry in particular, levies on Canadian-sourced lumber, which has been singled out by the Trump administration as potentially being subject to a 25 percent tariff, that is used for textbook paper and other instructional materials may be one of the biggest threats.
“We might see that have a long-term consequence on cost of goods, and those costs, whether it’s in education products or other sectors, will find its way back to consumers, be it school organizations, be it school districts, or consumers,” McVety said.
McVety has also had discussions with a Chinese manufacturer of STEM products like robots and drones that is looking to sell into the U.S. market. The company is now considering the option of manufacturing in the U.S. but are unsure if that’s a viable long-term solution.
“There’s going to be a lot arithmetic going into whether and how companies make the kind of commitment going forward that was potentially easier to make in [the past],” he said.
Communicate With Districts
Tariffs and policy changes that impact the cost of imported and exported goods may seem like a concern solely for companies moving physical products, but that’s not the case, said Sara Kloek, vice president of education and children’s policy at the Software & Information Industry Association.
Tariffs, including those on physical goods, could have tangential effects on an array of educational products across the ecosystem, she said.
With “any sort of increase in prices on things like paper or ed-tech components, the impact may be seen in the cost to schools, and schools may have less funds to buy materials,” she said.
This is especially true in a post-stimulus environment where district are already dealing with tighter budgets, Kloek said.
In addition to closely reviewing their own supply chains, Kloek advises ed-tech providers that they should be prepared to answer questions from school district clients about the impact of tariffs on those K-12 systems’ operations, and give them ideas for shoring up their exposure to financial risks.
“If a company has a STEM tool and it has some physical manipulatives that kids are using, where are you purchasing it from? Where is it manufactured? Is that going to be subject to tariffs?” she said. “It’s about understanding that so you’re able to answer those questions if they come from schools or the C-suite.”
Education companies have weathered a significant amount of challenges in the past five years since the Covid-19 pandemic began, and the Trump administration’s changes to trade policies mark another period in which they’ll have to navigate uncertain times – and an opportunity to amplify important information K-12 districts need to survive, she added.
“Reading the news, understanding the news, being good stewards of information, and sharing out high-quality information is something that companies can really lead on at this time,” Kloek said.
There is a “fundamental truth to the U.S. education market,” McVety said, as it remains one of the largest and most well-funded education systems in the world, educating roughly 54 million students. The U.S. education economy isn’t recession- proof, he said, but it is resilient.
“It’s still one of the most compelling markets for companies in the U.S. and for international organizations that want to be present here,” McVety said, adding that he has seen the market weather a number of significant challenges over the past 25 years.
“It will withstand some of the uncertainty that we’re facing now, because kids are still going to go to school,” he said. “Teachers are still going to need supplies, materials, and products to deliver teaching and learning experiences that are [in demand] and that our kids deserve.”