Even before the U.S.-China trade tensions escalated into a full-blown Trade War, a broad list of U.S. manufacturing industries had already been hit hard by President Trump’s trade tariffs. The series of tariff increases went into effect as early as January 2018.
Nearly all economists gave warnings that increased import taxes will also trigger increase in prices, and adversely affect trade relationships with affected countries, as well as disparage global economic growth. Trump insisted that tariffs will enrich the U.S., whilst stating
”Trade wars are good, and easy to win.”
Although Trump’s political advocacies and methods on how to globally put the country in a strong trading position seemed not to hurt other industries, the opposite actually happened. China and the EU, have in turn imposed retaliatory tariffs on goods imported from the U.S.
instead of rethinking, Trump made an even bolder move by announcing that all products exported by U.S. businesses to China will be also be slapped with a 25% tariff increase. As a result, the trade tension between the United States and China had developed into a full-blown Trade War. Many commented that Trump’s Tariffs actually had one principal objective, to weaken China’s economy and force the country to change its own global trading practices.
How Trump’s Tariff Policies Affected, and Will Continue to Affect the Music Gear Industry
On June 24, 2018, the Union of European countries announced a 50% increase on certain products that will be imported from the U.S. The list includes items that can have a significant impact on the music gear industry, specifically those that export the following:
- Portable Electronic Readers, particularly the battery operated type used in recording and in reproducing text.
- Apparatus for processing digital signal used in mixing sound, while connected to a wired or wireless network.
- Electrical machines capable of providing translation services or dictionary functions.
To make it clear, if a U.S. music gear manufacturer buys from an E.U. country, it is a US import currently not included in the list of products subject to Trump’s Tariff increases. However, on the part of buyers in EU countries, they will likely pay higher prices on US made music gear or music-related devices. Mainly because European importers/dealers of U.S. made products, will likely pay an additional 50% tax on such U.S. imports.
If China’s retaliatory 25% tariff on all U.S. exports continue, this will all the more make U.S. made products, less competitive globally. Most American manufacturers, including those that produce U.S.-made music gears and music-related devices, procure components from China. If so, their purchases will then constitute China’s U.S. exports that are subject to 25% tariff.
That being the case, the higher cost of China-made components will result to less profit. That being the case, manufacturers and retailers will pass on the additional costs to end-user consumers.
Local retailers therefore will also find it difficult to compete in the buying and selling business. After all, the resulting increase in cost of inventories will eat directly into their profits. As it is, the uncertainty of where the trade war with China is headed, makes it it difficult for them to offer voucher code that offer tempting price reductions.