12V Tariffs Hitting Home

Some 12 volt companies say they may raise prices as early as this week due to tariffs placed on Chinese parts and products.

Others say the tariffs could greatly harm their businesses.

JL Audio, Race Sport and Escort/Cobra are among the companies that say they will be hard hit.

Race Sport said that LED automotive lighting fell in this latest round of tariffs and it is expecting to receive a duty bill showing a 25 percent tariff this week.  As a result, it may soon raise prices.

President Steve Jergensen believes the entire LED lighting industry will raise prices soon. “By the beginning of September, most of the 12 volt business and definitely the lighting business will be affected by the tariffs.”

Rigid Industries, Oracle, and Putco lighting did not respond to our inquiries on lighting tariffs.

With tariffs at 25 percent, Jergensen noted that a $100 product that previously carried a$2.50 duty to import, now costs an additional $25 for a grand total of $127.50.

JL Audio may raise prices before the end of the year, it said.

It is impacted by Chinese speaker components that it uses to manufacture its speakers here in the US including magnets, cast metal parts, plastics, rubber products, wire, and the metals themselves.

Ironically, JL Audio must pay the tariff on these parts BECAUSE it manufacturers the end product of speakers in the US.  If it were manufacturing in China, or anywhere else in the world, its costs wouldn’t go up because finished speakers are not subject to the new tariffs, only their parts.  So speakers from China are not impacted, but the parts for speakers are.

“It’s pretty hard to understand why our government is stacking the deck against a US manufacturer. This may not have been the intent, but it is the outcome of these decisions,” said JL Audio VP Marketing Manville Smith.

He added, “We’ve contacted our Congressmen and Senators… but, we haven’t received any responses yet.  We’ve retained a law firm to negotiate with the US Trade Representative to slog through the maze to get exceptions to these tariffs. In that endeavor, we’re in there with thousands of companies trying to do the same, so the time frame will be long. It could be a year or two.  In the meantime, we simply can’t absorb 25 percent tariffs on so many components and finished goods.”

Cedar Electronics, which supplies the Escort, Cobra brands, said that 60 percent of the company’s annual revenues will be impacted by the tariffs.  In fact,  Cedar’s Mark Karnes, testified before the US Trade Representative last month.

The company has been hit with tariffs related to CB radios and marine safety radios in the first round of tariffs that took effect July 6. Then in the more recent round, hitting August 23rd, it was struck with tariffs on lithium ion portable batteries and power inverters, which impact its power pack line of products.   A third round would impact automotive cameras  as well as radar-related driver safety products like blind spot detectors.

“Out of the six categories we build product under, they’ve covered five,” said Karnes.  What’s worse, the company can’t just raise prices because its competitors are based in Japan and Korea, so its competitors’ goods don’t fall under the tariffs.

And for Cedar to switch to factories for parts outside of China would take 18 to 24 months and costs millions of dollars, said Karnes.

Perhaps the most ironic twist in this saga is that Cedar had just opened a manufacturing facility in Ohio that makes custom radar detectors.  But now its costs for the parts have jumped 25 percent due to the tariffs.

“I just got a 25 percent cost disadvantage courtesy of my own government.  If I start raising prices, I’m going to be handing my business over to my competitors,” Karnes said.

Stay tuned for information on the third round of tariffs, which could hit this month.

A listing of products impacted by the second round of tariffs implemented August 23 may be found here.