Some car audio and electronics companies, are now making contingency plans in the event that President Trump’s plans to place a 20 percent border tax on foreign goods entering the US comes to pass, we are told.
There were many media reports last week on how such a tax would cause a hike in car prices. It would also likely cause an increase in car audio prices, or at least on prices of higher end car audio items. We’ll get back to that in a minute.
Regarding cars, the tax would cause auto prices to “soar out of range,” for many buyers, said Automotive News, and would likely cause consumers to hold onto cars longer.
A 20 percent tax would cause GM to raise its price on average by $995 per vehicle, Toyota by $2,651, Subaru by $3,656 and Volkswagen by $6,779, according to a report by Baum & Associates. (It varies by whether the cars or its parts are produced overseas). Ford, with more production in the US, would be less affected with an average price hike of only $282 per vehicle but Volvo, would be one of the most heavily impacted, with an average increase in price per car of $7,643.
The average Honda would jump $1,312 in price, Chrysler, $1,672, Nissan $2,298, BMW, $3,725, Hyundai/Kia, $2,704 and Mercedes, $4,211.
A new car could become a luxury affordable only to the top wage earners, said NADA, the National Automobile Dealers Association.
For car audio, a border tax (called a border adjustment) would cause a spike in some products.
One industry executive said it may be likely that only higher priced goods will be impacted, and that companies will keep low end products at current prices to attract buyers but make up the margin shortfall at the higher end.
As everyone knows, car audio margins are already stressed to the limit, so any additional costs would likely result in a price increase.
Also, all foreign imports would be taxed and so consumers will find themselves paying higher prices for many every day items. This may stress their budgets for elective purchases like car audio. Then again, if consumers keep cars longer, they will want to upgrade their electronics.
Meanwhile, the National Retail Federation is claiming that a proposed $1 trillion border tax would cause a major rise in prices and cost Americans jobs.
Photo via NRF showing President Trump meeting with CEOs of leading retailers at the White House last week.
An old Chinese proberb…
“If you save the green mountain, you will not worry about having no firewood to burn”
We have Touchscreens at the box stores now selling under $100 with Bluetooth. Single Din with CD down to $35. Manufacturers are on a race to zero. If this is what it takes to raise prices so be it. Our product is losing value at a record pace.
MMATS Pro Audio supports American electronics parts distributors i.e. Digi-key, Avnet, Mouser, Arrow to name a few. All sell import components mainly because the US made Electronic Component Industry cannot support these parts. The actual cost of these import parts for MMATS is so small in relation to the total parts cost, a 3000 watt amplifier would go up a mere $45.00 at MSRP, I believe a Made in the USA Car Audio amplifier will support this. To my competition who have chosen to import their entire line of Amplifiers, they could see the entire 20% applied to every unit. This would be very costly and might even work towards bringing this manufacturing back to the USA. I would welcome the 20% tarrif…go Trump!
I see this as a non issue. Sure, people shop price for car audio, but if every unit produced out of country went op 30 percent, they would STILL buy car audio. Maybe they would buy a 600 watt amp instead of a 1000 watt amp because it fit their budget, but as long as all imported goods go up in price it wouldn’t matter.
As far as new car prices going up by a few thousand dollars making it impossible for anyone but the wealthy to buy a car…. LOL. They may buy one with a few less options to get the price where they want it. That would actually be a good thing for the aftermarket, as it would open the door up to more sales for us.
For our manufacturing this really doesn’t change a thing. Under current law we pay 19% tax on parts imported from China. Its only if we build the entire assembly in China that we DON’T pay the tax. This encourages manufacturers to import an entire assembly to avoid the tax. The current law is very wrong and imbalanced imho.
Fair Trade……….. If you want to sell in the USA you can’t manipulate sale of goods for who you trade with. We can compete on the world market provided its fair trade.
you know why Beef cost so much now? I’m going to say because of exports to China.
China dosn’t play fair, Ask Manville Smith JL’s run in with China and previous projects.
TMA Line… I sold JL Audio at dealers in My area I worked at the first store to bring the line in this city an watched the line go from Car audio subs to subs and the first try at speakers then subs and amps ( I predicted that as well as headunits And I even knew who’d be the head of electronics division at JL) I didn’t expect to see the line go into Home Audio, or boats. I still love my Keychain I got in 2000 its with my car keys still. that was a classy hand out to installers. Thanks Its little gifts like that that makes it worthwhile.
It shows you care about everyone in the line from manufacturing down to the installer.
Honestly what did those cost? Because it was worth the investment.
I have not worked in Car audio at a store in 10 years and I did it for 17+ I won’t forget the T-shirts and gadgets we got as gifts.
This is somthing every manufacturer should do.
Yes I think TMA was a bust for JL but a lesson well learned.
Intel is learning the same lesson
As are other manufacturers.
In electronics everyone knows where the best electronics come from, its not all Japan or The USA its all over the world. Fair Free trade works, provided no one is playing with the money end of the deal.
I’ve gotten some serious disappointment from buying junk from China, but I’ve also gotten good stuff.
Manufacturers can’t pick the cheapest labor pool because quality will suffer.
Look at some of the knock off’s on e-bay made in china. Thats a big problem Pat infringement. Ask Taylor if the china made 6 string is as good a knock off as the original
Or Oridan dust deputy Yes even JL’s dust separator system at the factory.
China needs to stand behind American Pat.s and bring fakes to justice.
I’ve seen amps Kenford that looked like Kenwood’s old models How this crap got past customs is beyond me but someone brought a van full of the stuff and tried to get the store to sell it, sure its got a tail light warranty, If I can’t see your tail lights you get no warranty.
Amazon needs to get down on exporters selling crap in the USA that’s not original products.
Otherwise we can crank out billions of 1/10 cent chop sticks that don’t work. ( that wasn’t ment to be a racial slur when was the last time your spoon bent in 1/2 eating ice cream I’ll bet it was made in China and they crank out billions of them why because they know they will bend in half when you go to use it) So you run out and buy more.
You could take 50% of the brands off the market and do us all a favor save natural resources. Cut down on carbon footprints and stop filling land fills.
High end brands don’t have to compete with crap on price. When consumers realize saving a buck cost them in the long run on some items they will stop buying junk and just spend it on the good stuff at the start and take care of it so it lasts a long time. We made things in the 50’s that still works today, people still use them manufacturers didn’t worry about competition for cheap brands. Home appliances lasted 25-30 years, now your lucky if they last 3. Energy star my a**!
What is discussed here is only half the story. There are offsets and the net is effect is not anything near 20%. Here is a link to help understand. http://fortune.com/2017/01/31/the-truth-about-the-20-border-tax/
This proposed tax is not a tax on foreign producers or on American companies building products in other countries. The cost of the tax will be paid by the consumer! Anybody who thinks this will create manufacturing jobs here is not seeing the whole picture.
In the consumer electronics business, everything has foreign content, including those products that are built here in the USA. If this plan is implemented, our industry will suffer, short-term and long-term.
The CEA has already objected to this proposed plan. Everyone in this industry needs to do the same via their Representatives and Senators. Protectionism is not a viable trade policy… never has been. It is the hallmark of desperate, third world regimes, not one of the world’s most powerful economies.
go get ‘en trump.
g
Build it in America and this subject wouldn’t even get mentioned. Fortunately at MMATS, I still build American made amplifiers from the first resistor up. SMT, Contact and Wave Solder in house. It’s not Republican or Democrat, shame on the last 5 Presidents for letting this imbalance get out of control. China charges American goods 50% duties going in and Mexico charges 15-20%….so much for NAFTA. Check out http://www.autoguide.com you will be surprised what cars are made in Mexico.
Where do all the parts in your amplifiers come from, David? How about a nice 20% increase in the cost of all of the imported ones?
I agree with you that other countries need to lower their tariffs, by the way. The Chinese get away with protectionism and currency manipulation. On this issue, Trump is right.