Industry Reacts to Lower Tariffs on Chinese Goods

The news of lower tariffs on Chinese imports sent car audio suppliers back to the drawing board to reassess pricing, shipping, etc.

Early Monday, the Trump administration announced tariffs on Chinese imports will be reduced from 145 percent to 30 percent for 90 days starting Wednesday. The 30 percent tariff includes a 20 percent fentanyl-related tariff plus a 10 percent levy).  China, in return, dropped its tariff on American goods down to 10 percent.

A key question now, is will those vendors who raised prices, keep the higher prices in place or reduce them?

Suppliers we contacted claimed they were still in discussions, and still have many questions. They note that the tariff reduction is only for a 90 day period at this point.

Blane Hartleb, owner of powerhouse retailer Outrageous Audio, OR had spent the weekend re-pricing the store for the new tariff-related price increases and went back in at 4 am Monday to re-price them yet again after the announcement Monday.  “I can’t have all those new tariff prices in place, it would look horrible,” given the new lower tariffs, said Hartleb.  Instead, the store will show the post-tariff prices but then show an “On Sale” price at the pre-tariff prices pre-April.

We know of at least 7 vendors who have raised prices since April.

KICKER, said for its part, nothing has changed as of today. “We still have our two price sheets each year, the next one due in July.  We have increased our safety stock levels over the past nine months to make sure we have inventory to cover spikes in business or unusual situations.  Just like everyone else, we are watching this carefully so we can make good decisions that won’t impact our dealers and customers negatively.”

Questions vendors are seeking to answer include:

When and how will production resume at car audio factories in China (most have been shut down since early April).

When, in the shipping, process do the new tariffs apply–if a ship is already on the water, does it qualify for the lower tariff rate?

Should suppliers air ship goods in order to get new shipments to the US under the 90 day window?

Should a supplier reduce prices if it recently raised them due to tariffs?

Should companies that were considering moving production outside of China go ahead and move to another country?

With much production in China halted since early April, many industries, including car audio, are expecting at least some product shortages.  Vendors said it can take three months or more to refill the pipeline once production restarts.  Some vendors and dealers have been stockpiling in anticipation.

Chris Cook of the Mobile Electronics Association said, “The recent de-escalation of tariffs regarding trade with China should be considered a positive for our industry as the previous tariff levels would have significantly impacted …manufacturers, retailers and consumers alike.”  He continued, “Regardless of the final outcome, our industry has faced many significant challenges and has always risen to the occasion. I would expect nothing less as we navigate this challenge together.”