Car Audio Officially Zapped With Tariffs

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navigation-deck

Feature Story–Car navigation devices, including those incorporated in a vehicle, are officially on the list of goods getting a 25 percent tariff as of July 6, according to the Consumer Technology Association (CTA).  In addition, car amplifiers are on the newer list of Chinese products slated to be tariffed in the next round, it said.

Similarly, Epsilon said it has been informed by its Freight Forwarders that 30 percent of its products are affected either directly or due to tariffs on the components and materials that make up those products,  including parts such as tantalum capacitors, alloys of aluminum and others.

Epsilon’s Paul Goldberg said, “A lot of components that have metals, either copper or aluminum or steel, are being affected by this.  It’s a two fold increase.  The first is just raw material costs have gone up so we’re seeing price increases from our vendors and secondarily, a number of items, almost 30 percent are directly affected…a number of amplifiers; they have a lot of metal parts and a number of head units, a number of specialty items; our bass processors are affected.  Right now we’re kind of gathering information to figure out what the real costs increases are and we’re going to be forced into a situation where we’ll see if we’re going to have to raise prices.  Unfortunately, it’s not something we want to do. It’s not good for the industry.”

On the other hand, Pioneer’s Ted Cardenas said the company has numerous manufacturing facilities in countries other than China and will be able to shift production to avoid tariffs. “We can make a radio in China today, but we can change it to Mexico or Thailand,” he said.  Pioneer’s Mexico facility mainly produces OEM products, but it can also make aftermarket products, he added.

While the first wave of tariffs has already taken effect on $34 worth of goods, a second wave is due to take effect this summer on another $16 billion in goods.  The Trump administration is also considering imposing yet another 10 percent tariff on $200 billion more in Chinese goods, which would essentially put a duty on most of the products imported from China (but not smartphones).

Sage Chandler, Staff Vice President, International Trade, Government Affairs for the CTA said,  “Of the original $50 billion in tariffs on China, items including lithium batteries, navigation devices, disk drives and circuit board components will be affected – hitting $15.2 billion worth of Chinese imports.”

She added, ” While President Trump says his trade policy is meant to punish China, the numbers show that, in reality, U.S. businesses, workers and consumers will pay the price under this policy….The impact of tariffs on the average household means $150 to $306 less income a year.”

The Wall Street Journal reported that the third wave of tariffs (10 percent on $200 billion in goods), will include “Bluetooth speakers, amplifiers, surge protectors and cables that connect computers and other electronic equipment,” according to the CTA.

 

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25 Comments

  1. About as example I seen you could go to India for your magnets you don’t need China. A big magnetic company that was buying neo from China switched to India for cheaper pricing. You can tool your own baskets in house a lot of smaller hi-end companies do this. If you google looks like the mines maybe opening again in the US. Maybe it may hurt a little bit but China has gotten strong from US manufacturing in general but at the end of the day if Trump does not deliver by 2020 he could be voted out and whoever takes over can roll back the policies. So everyone will scramble to find new offshore manufacturing or do it in house

  2. Tariffs on assembled products I can understand.. but tariffs on the materials used by companies who assemble products in the US employing US citizens needs to be reconsidered. JL audio summed it up very well above, if anything I can see this driving production away from US soil in favor of cheaper labor overall, avoiding the material tariffs, and simple absorbing the tariffs on the finished product via using cheaper labor to assemble it.
    The ‘idea’ behind it I can understand, but I don’t think it’s going to work in action at all.

  3. Andy Wehmeyer, Audiofrog–China has already announced it’ll invest the tariffs it collects into domestic manufacturing to prop up Chinese industry. Many of the strategic industries in China are state owned or partially owned. Without a profit incentive and ravenous shareholders, those will remain largely unaffected.

    This is an unnecessary mess.

  4. Oh, I forgot all of trumps predecessors Had years and years of experience building billion dollar companies that were solvent… Solvent

  5. There is no way that Trump’s end goal is tariffs. He wants fair trade and you should too. Everyone knows tariffs are not good. This is a temporary situation and the amount of panic is comical. He is trying to fix a problem and should be given an opportunity to do so.
    JL has a point about finished goods and should contact Trump about the problem if they have not done so.
    MAGA

  6. Manville Smith, JL Audio –This will not make America great. It will hurt U.S. companies and U.S. consumers.

    Protectionism never works to drive economic growth. It creates stagnation, limits innovation and encourages inefficiency. Study the economies of Argentina and Brazil if you need examples.

    This is big-boy stuff, not some political rally where slogans stand in the place of sound policy.

    Ronald Reagan: “We should beware of the demagogues who are ready to declare a trade war against our friends—weakening our economy, our national security, and the entire free world—all while cynically waving the American flag.”

  7. Most interesting to finally see other countries put the pressure on us, I’m sure this will affect business, but we must adapt, improvise, overcome!

  8. John Borges, Zapco –“OR… Just might make some American companies thinking about making these products again”
    Really ??
    Sorry folks but that’s rediculous. Note JL’s post. It’s not just finished good going up, it’s the raw materials we need to build. Depending on how the tarrifs work, raw material could go up even more than finished goods, and that will make it even harder to build here. It has been just labor issue…now it will be labor and raw materials both.
    Your customers will have to decide whether to pay more to buy stereos or to spend what they still have on something else.

  9. Eric, Radio Dr–Probably didn’t take the time to read an actual US manufacturer’s view on this, but not surprising from a MAGA sheep.

  10. Dust off those old car stereo making machines America or was that japan? Hmmm you mean I might be able to make more than $7 on a radio. 😂

  11. Manville Smith, JL Audio –JL Audio builds more aftermarket car audio products here in the US than anybody else. The tariffs being proposed will hurt our business and are a terrible idea.

    JL Audio imports component parts like ferrite magnets, for example. Many of these come from China. We use these parts on the speakers we build here in the USA. There is a proposed 10% increase in tariffs on magnets from China (just to name one component part that is affected). That’s bad enough, but it gets even dumber… there is no proposed tariff increase on finished loudspeakers from China. So, it is essentially incentivizing us to cease loudspeaker production in the USA and shift it all to China. We employ 400+ people here in the USA. We could very easily be an import-only company with fewer than 100 employees.

    So, we should buy ferrite magnets from US suppliers, right? Too bad there aren’t any. The last one (General Magnetics) was bought by Hitachi in the late 1990’s and then shuttered. In the long run, someone might build a magnet factory here, but in the short term we have to absorb the cost. And when the US magnets were made available a decade or more from now, they would likely be more expensive than Chinese magnets, due to the labor costs, regulations and the tariffs acting as a price support.

    Tariffs are a tax that is paid by our customers. China pays none of the money to the US Treasury. The U.S. importers pay the tariff, and the cost is passed on to consumers. The proposed tariffs will make our products more expensive and they will HURT the car audio business. These tariffs will also invite retaliatory tariffs that make US-built products more expensive in export markets. We already struggle with the labor costs to build things here. We don’t need our government working against us at home and in our international markets.

    Anybody cheering this as some kind of win for the USA really needs to think about it beyond one-line slogans and emotional arguments. The people coming up with these tariffs cannot possibly understand all the ramifications of their ideas.

    Please write your Senators and Representatives. Tell them to oppose these tariffs that will hurt all our businesses.

    The time to do so is short. Act now.

    1. Glad to hear a business focused response to this insanity that represents an understanding of the ramifications of “political” decisions made in response to temper tantrums instead of the real issue.

      Ray Windsor

  12. Ray Windsor–The original intent of tarrifs was not to punish other countries, it was to protect American manufacturers from manufacturing subsidies provided by other countries to their manufactures. The tariff was intended to maintain a “level playing field”. Using a tariff to punish a supplying country when the home country is not in the business of manufacturing the affected goods is tantamount to banging one’s head on the curb in attempt to resolve one’s headache.

    1. Ummmm….when raw materials are taxes too, that makes domestic production pretty tough. Or we can just move production to any other country with a low working wage…..which do you think will happen?

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