what’s happening
How INCREASED Tariffs Are
IMPACTING The Industry While it’s still too early to tell how increased tariffs will impact the coming year, manufacturers including JL Audio and Audiofrog share uncertainty and deep concerns about how tariff increases will impact American companies. WORDS BY ROSA SOPHIA
After a 10 percent tariff was applied to many products and items, another hike is anticipated—specifically 25 percent, expected to take effect in January. Currently, completed speakers can be imported from China without a tariff, but parts needed to build them in the United States are subject to tariff. This causes great difficulty for companies that manufacture here in the U.S., according to Manville Smith, vice president of marketing at JL Audio, based in Miramar, Fla. “As it stands right now, if you’re building them here, you’re being penalized,” Smith said. “It’s backwards. If the goal is to support U.S. manufacturing through tariffs, the tariff belongs on finished loudspeakers made in China, not on parts needed to build them here in the U.S.” In the past 10 to 15 years, Smith said, JL Audio has focused on bringing more speaker production back to the U.S. by investing in equipment, real estate and personnel. The company has over 500 employees. “We’re committed to it,” Smith added.
14 Mobile Electronics November 2018
More tariffs are anticipated in January, but the future remains uncertain. The situation has been confusing for many companies that are now reaching out for advice, according to Sage Chandler, vice president of international trade at the Consumer Technology Association. However, Chandler noted, customers overall aren’t noticing price increases just yet. “The smaller companies haven’t felt it yet, but the bigger companies they’re buying from will see large distributors purchasing things in massive bulk. Some of those big companies knew what was coming and they stockpiled,” she said.
Manufacturers Prepare for Increased Tariff by Raising Prices Many companies are increasing prices or planning to, according to Chandler, who stated that it may take a few months for people to fully understand the impact. “I’m getting a lot of emails from companies sending me notes from their suppliers saying that because of tariffs, they’re being forced to raise prices,” she said. More than the parts, it is also the equipment to create parts that is impacted, Chandler added. “For example,
there’s a lot of semi-conductor manufacturing in the U.S. It’s one of our biggest exports.” Despite this, the equipment needed to make the semi-conductors is also being tariffed. Along with JL Audio, AudioControl is being impacted by the changes. “Despite being a U.S. manufacturer for the majority of our products across our automotive and residential business, we are impacted by the 10 percent tariffs recently imposed on a number of product categories,” stated Alex Camara, CEO of AudioControl. According to the company’s official response, there is no price increase across the product line yet, but prices will be adjusted January first, or even as early as December. “The costs of our raw materials and finished goods have increased, as have transportation costs.” Tariffs on imports from China are affecting the company’s products relating to the parts used for manufacturing in the U.S., stated AudioControl. “We continue to work on a number of ways to minimize the impacts of these tariffs but at this time, price changes will need to be implemented and our aim is to hopefully do this once.”
