Update on Tariffs

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Tariff Update

Tariffs, as you recall, are costing suppliers up to 30 percent on some car audio goods and contributing to higher price tags on amplifiers, speakers, head units and other products.

The tariffs on Chinese goods levied several years ago are set to expire starting in July, unless industries petition the Fed to extend them, reports Politico.

The US Trade Representative’s office is expected to start taking comments on the issue.

Some economists and government officials are calling on the Biden administration to reduce the tariffs as a means of lowering inflation.

A well-reviewed study in March found that rolling back about 2/3rds of the tariffs on Chinese goods would return $800/year in US consumers’ pockets. This is one of the most effective tools available at present for reducing inflation, said some economists.

However, others in Washington, including US Trade Representative Katherine Tai would like to keep the tariffs in place as a bargaining chip for negotiations with China.

NavToolBy contrast, US Treasury Secretary Janet Yellen said she would like to see a roll back in tariffs.

The Trump administration’s tariffs amounted to an average of 16 percent fees on $506 billion in goods or $81 billion in higher costs for consumers.

In car audio, some suppliers pay tariffs of 25 to 30 percent on amplifiers and head units. Some pay a 7.5 percent fee on speakers and others pay 25 to 30 percent on Advanced Driver Assistance Systems (ADAS). The fees amount to tens of millions of dollars a year to the 12 volt industry.

Sources: Politico, Peterson Institute, Peterson Institute, Washington Post, Barron’s

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  1. I have a strong feeling even if the tariffs went away, prices would not decrease. If they do, they would decrease very little. A precedence and budgets have been established. Chinas technological manufacturing speed has also proven to move at a faster rate than anyone else’s. They have what’s called a Makers Manufacturing Society . So, if some other country started making Mobile Electronics technology, by the time they finish R&D and build out an assembly line, China will have already built something better. It’s a hard truth, but it’s a result of them sharing ideas with one another. They don’t have a patent structure. So, basically to move at their speed you need all your fellow competitors to share their ideas with you. That’s what they call a Makers Manufacturing Society. China starts their students manufacturing education at the age of Eight. Please don’t misunderstand me, I would love to see manufacturing move back to the USA, but lets face it our education system in the USA is broke, broke, broke.

  2. Double-edged sword. As manufacturers, or “manu-packagers”, whichever applies, the tariffs were to push us to find solutions in other countries and stop feeding China. For me, it has not worked. Unfortunately, the car audio market cannot simply move production to another country overnight. What I have seen is actual China factories opening facilities in other “friendly” countries. I think even they see the writing on the wall. Will I continue to look at solutions in other countries, definitely!

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