What will the impact of prospective -- and possibly impending -- U.S. tariffs be on audio gear?

[Sokel]

If I were in US I would sure push my rep to include repair exceptions or to make them simple (I know they exist but it's a nightmare as I read what it takes) .
If not,everything from abroad above a certain value will just be a gamble.

(and what happens with used stuff?)

 

[JustJones]

Tariffs increase the price of products purchased from another country, making them less attractive to domestic consumers. If consumers choose the imported product then the tariff has increased the cost.
To use a quick and dirty example. If DAC's from China increase 50% due to tariffs say a $200 Topping goes to $300, then the consumer can either pay the price or buy a domestic DAC for instance a Schiit that was $200 but went up 25% (because yeah that's how it works in the real world) and is $250. See the domestic product is a bargain!

 

[Mart68]

a lot things on paper make sense

i learnt that in 1st year econ

also in that list Russia is at #9... bigger than UK and France and yet there's nothing from Russia I own except a few bottles of vodka...

It's a list of worlds largest manufacturing nations, not world's largest exporters.

Exporters is a bit different but does include service exports:

List of countries by exports - Wikipedia

en.wikipedia.org

Russia at 22 - biggest export is petroleum.

 

[holdingpants01]

Also expect retaliatory tariffs imposed on the USA in exchange, this would hurt the US twice

 

[A Surfer]

Indeed. Why would there be a one-sided relationship here? It cuts both ways. If any country decides to not be a good trading partner, especially when that country was instrumental in creating the international globalization of trade, and suddenly decides they want to hurt everyone else. In such an interdependent, interconnected system, wouldn't that nation also feel the pain?

 

[dfiler]

I want to commend everyone for an amazingly level-headed discussion. As a Pennsylvanian, I've been bombarded with the most aggressive political canvasing in human history for the past few months. It's great to read analysis and discussion rather than political attacks!

Economic impact is the focus of this thread so far. Another factor to consider is strategic positioning. The US would have a stronger adversarial/defensive position in the world if not so dependent on one country for so many critical goods. Moving production stateside is the ultimate solution to that. Though a lesser benefit is moving production out of China, even if it doesn't become domestic.

Not to say the long-term strategic benefits merit the immediate economic harm. But it is a balance that nations have had to make throughout history. It's the insurance of self-sufficiency vs the efficiency of global trade.

 

[a4eaudio]

In econ 201 (I think it was) we were told that the main justification for tariffs or other protectionist trade policies were to protect strategic or nascent industries. I.e. you wouldn't want to put all your eggs in one (foreign) basket when it came to food, medicine, or other necessities

Yes, and this is a valid reason.

Historically politicians argue this is why they are putting tariffs in place even when it isn't the real reason.

 

[A Surfer]

I can't help but feel that it is wishful thinking at best to think there is any chance of achieving this poorly illuminated self-sufficiency. At least in anyway that matches the extreme rhetoric that has been bandied about in recent months.

The sheer complexity and scale of international trade and supply chain interests is staggering. On top of that as I suggested earlier is at play. When you create a game, aggressively force it into existence, maintain it staunchly. Suddenly when it no longer affords the dominant position it was designed to do, saying we don't want to play anymore unless everyone makes sure we win is a tough sell.

 

[MattHooper]

I’ve been waiting for this thread in every audio forum

Good discussion. I’m glad I’m finished all my major purchases in audio.

Though there is a video streamer I’ve wanted for my home theater - expensive but would buy on used market. (I’m in Canada). Should we expect the price of used gear to go up?

 

[A Surfer]

I’ve been waiting for this thread in every audio forum

Good discussion. I’m glad I’m finished all my major purchases in audio.

Though there is a video streamer I’ve wanted for my home theater - expensive but would buy on used market. (I’m in Canada). Should we expect the price of used gear to go up?

Probably not. Except that our purchasing power is almost certainly going down relative to the US dollar.

 

[A Surfer]

When your entire economic history and ascension to global dominance was completely underwritten by international trade, it feels problematic to suddenly ascribe all domestic social ails to the hand that has been feeding you. That ultimately goes for all trading nations. Like it or not, we are all bound together and the only true self-sufficiency is global fairness which is not in the domain of any one actor, no matter how powerful to claim right to defining. The rising tide floats all ships analogy seems appropriate.

As does the adage keep your friends close and your enemies closer. Other great powers reliance on trade is actually a fantastic international control mechanisms. Why would weakening it ever be good?

 

[a4eaudio]

the chinese are NEVER going to take a haircut just because the end user market requires tariffs - that's the consumers' problem

They don't really have a choice. It depends on the market and elasticities of supply and demand.

Consider an input in the manufacturing product for a US firm. The EXACT same product is made in China, Mexico and Poland. The US firm will buy from the cheapest supplier and would likely prefer to multi source it's suppliers to diversify risk. Shipping is more expensive from China and the Chinese supplier will have to bear the higher shipping costs. Otherwise the US firm will only purchase from Mexico and/or Poland. If the US adds a Tariff on China the Chinese supplier can bear the Tariff or lose all of it's sales to the US customer(s).

 

[A Surfer]

They don't really have a choice. It depends on the market and elasticities of supply and demand.

Consider an input in the manufacturing product for a US firm. The EXACT same product is made in China, Mexico and Poland. The US firm will buy from the cheapest supplier and would likely prefer to multi source it's suppliers to diversify risk. Shipping is more expensive from China and the Chinese supplier will have to bear the higher shipping costs. Otherwise the US firm will only purchase from Mexico and/or Poland. If the US adds a Tariff on China the Chinese supplier can best the Tariff or lose all of it's sales to the US customer(s).

I'll repeat myself. Keep your friends close and your enemies closer. You want them to need you, you want them to always see peace as the better option. It is like not wanting to break up with a partner you love, but deliberately giving them compelling evidence the relationship doesn't work. Seems like a risky proposition.

 

[tmtomh]

I generally agree with those who say tariffs are not good economic policy. That said, a couple of qualifications:

1. As has been noted previously in the thread, many nations including the US and European countries already have longstanding tariffs that have persisted throughout the entire era of globalization and "free trade." I believe the US has increased some tariffs for strategic/parity reasons during the Biden administration (naming the administration just for identification/time-period purposes - not trying to make a partisan point here), to help enable some US industries to compete with foreign competitors for various reasons. So tariffs are not an all or nothing proposition when it comes to economic policy or a national economy's health.

2. My understanding of things like the "60% tariff on all Chinese goods" is that an Executive Order enacting such a measure would have an effective date of 9-12 months out, and it would be used as a bargaining document to initiate negotiations. So a scenario in which the US imposed huge - and, frankly, insane - tariffs on most or all Chinese produced goods, and China imposed similar retaliatory tariffs is certainly possible, but I don't think it's the most likely scenario.

Part of the difficulty I think we are all reckoning with, across whatever our personal political leanings might be, is the inability to figure out what threats and claims might be negotiating gambits, which ones might be actual intentions, and which ones might be just stuff that is said for short-term reasons but might not be followed through on in anything resembling what's currently being claimed. There's a pretty wide range of the unknown here at the moment.

On a related note, my only real source of hope regarding the nationalist turn in economic policy worldwide is that technological advances are progressively enabling the small- and medium-scale manufacturing of many types of goods, and so in my view there is a possibility that negative impacts of increased protectionism can be partially absorbed by a further dispersion of manufacturing capacity across the world. Put more simply, I think there's an emerging opportunity for more different things to be made in more different places, turning "national self-sufficiency" into more of a "not realistic but we can kind of sort of get partway there" thing instead of a "total insane pipedream" kind of thing. And the more places more things are made in, the more options there are for buying (or not buying) from any one place.

 

[A Surfer]

Still, really risky and questionable tactic to threaten to dismantle your most treasured creation, globally dependent trade. Nobody else is making out like gangbusters in the international community. All nations are sharing the same pains. We got into the situation together, transitively the problem needs to be solved collectively.

 

[JohnnyAudio]

Here in upstate NY a major hardwood company nearly closed the door when Trump 1 tariffs got them.
This company harvested fine hardwood from the northeast, processed it into boards and sold abroad.
Tariffs were applied to finished Chinese furniture using this wood, so Chinese applied their tariffs to the American hardwood imports.
The price of imported furniture went up by 20-30 % and sales slowed significantly.

Electronics may not be affected but we will feel the inflation.
Most audiophiles are independently wealthy so not a problem.

 

[MattHooper]

Here in upstate NY a major hardwood company nearly closed the door when Trump 1 tariffs got them.
This company harvested fine hardwood from the northeast, processed it into boards and sold abroad.
Tariffs were applied to finished Chinese furniture using this wood, so Chinese applied their tariffs to the American hardwood imports.
The price of imported furniture went up by 20-30 % and sales slowed significantly.

Electronics may not be affected but we will feel the inflation.
Most audiophiles are independently wealthy so not a problem.

I’ve read of a small manufacturer whose employees were told there will be no Christmas bonus this year because that money is going to stocking up on supplies that are going to become more expensive once the tariffs come on. Apparently the nature of tariffs had to be explained to the baffled employees who thought that the higher cost stays with the country that is tariffed.

 

[JeffS7444]

Open a piece of "Chinese" audio gear, and what do you see? The things are chock-full of chips designed in USA, EU and Japan. We need them, and they need us. To date I have purchased just one bona fide PRC-designed and fabricated IC, and it's not a fancy microcontroller, CPU, DAC or opamp, but a humble battery charge controller.

But mostly I'll be watching to see how the USA stock markets perform, or don't.

 

[phoenixdogfan]

I heard from a very trustworthy source that:
- China will pay the tariffs
- Prices won't go up
- Tariff revenue will significantly reduce the federal deficit and we will get tax breaks

With the increase in disposable income from the tax cuts and no increase in prices, we should have a golden age of audio enjoyment.

ROFL!

 

[JeffS7444]

But regardless of how the USA elections played out, I was guessing that the days of high quality, yet bargain-priced goods from PRC were not going to last forever, so I've been doing a little bit of shopping.