As many of you will know, at the beginning of this year, Donald Trump imposed tariffs on solar panels and washing machines. Last month, on June 1st, The White House imposed a 25% tariff on steel and a 10% tariff on aluminium imports.
This action from the US could damage business confidence at a time when growth is slowing. The tariffs affect the world’s three biggest economies – the US, China and the EU – and consumers are often the ultimate losers from trade wars.
The tariffs have angered many trading partners, who have implemented retaliatory tariffs on U.S. goods.
China accused the US of starting a trade war and last month, on July 6, implemented tariffs equivalent to the $34 billion tariff imposed on it by the U.S.
There has already been reactions from some of the big players, such as Harley Davidson, who in response to Trump’s tariffs, have started to shift production out of the US. In the short term, Harley says it will absorb the cost of the tariffs, rather than passing it on to their customers.
To cite just one music industry example, synthesizer manufacturer Moog Music Inc have released the following statement:
“25% Tariff On Chinese Goods Threatens Our Jobs
We need your help.
A U.S. tariff (import tax) on Chinese circuit boards and associated components is expected to take effect on July 6, 2018.
These tariffs will immediately and drastically increase the cost of building our instruments, and have the very real potential of forcing us to lay off workers and could (in a worst case scenario) require us to move some, if not all, of our manufacturing overseas.
We ask that you will support us by imploring our elected officials to recognize that these tariffs are seriously harmful to American businesses like Moog.”
Our good friends at Music Trades Magazines in the US have written an article titled “Global Trade Policy and how it impacts the music products industry”. It’s an analysis of the varying important duties around the world and how they affect retail selling prices.
They have rightly commented that although the music products industry is relatively small, it’s genuinely global in scope. They say:
“By our estimates, about 65% of the $7.4 billion dollars of merchandise that flowed through the US retail distribution network in 2017 was manufactured outside the US.”
“Guitars retailing for under $1,000, student wind instruments, and most products contacting a circuit board were imported.”
“US exports were far more limited, consisting almost exclusively of premium guitars, guitar strings, some effects devices and Steinway pianos.”
Some good news…
Despite this (and after substantial CAFIM lobbying) China also announced last month that they will cut import tariffs on nearly 1,500 consumer products ranging from cosmetics to home appliances, and especially, musical instruments in a bid to boost imports as part of efforts to open up its economy.
From this month, the average tariff rate on 1,449 products imported from most favoured nations will be reduced by more than half to 6.9 per cent from 15.7 per cent.
The MIA will of course keep you updated with any developments which may impact our industry.