Tariffs, Trade War, and MI

In January of this year, America began imposing tariffs on primarily Chinese-built goods and China-sourced materials and, in July, the U.S. initiated 25% tariffs on $34 billion worth of goods imported from China – which, in turn, resulted in Chinese tariffs similar in scope on U.S. products.

Just today, as I write this (October 25), another line in the sand has been drawn. “The U.S. is refusing to resume trade negotiations with China until Beijing comes up with a concrete proposal to address Washington’s complaints about forced technology transfers and other economic issues, said officials on both sides of the Pacific,” reports The Wall Street Journal.

“The impasse threatens to undermine a meeting between Presidents Trump and Xi Jinping scheduled for the end of November at the Group of 20 leaders summit in Buenos Aires.

Both sides had hoped the gathering would ease the trade tensions. U.S. businesses have been counting on sufficient progress at the meeting for the Trump administration to suspend its plan to increase tariffs on $200 billion of Chinese imports to 25% on Jan. 1, from the current 10%. Such a move would be a blow to U.S. importers and consumers.”

The reasons behind these moves are varied, nuanced, and deeply complex. Personal politics aside, in an industry such as ours, with increasingly interconnected global ties, it’s worth paying attention when the leaders of world’s two largest economies are increasingly pushing one other’s buttons.

I know that I was certainly keeping an eye on developments between the two countries before I headed to Shanghai for the Music China show this October – not that I was expressly concerned for my own safety or anything quite that dramatic; it was more a case of, “Hmmm… I wonder how all of this ‘Trade War’ stuff may change the tone of the show, if at all.”

“There certainly were a lot of rumblings of discontent and eye-rolling at the current state of affairs between the U.S. and China [at Music China],” says Colin Schofield of JodyJazz, Inc. “I don’t see the trade tensions having much effect at the current time. But – and this is a big ‘but’ – if the Chinese government urges a boycott of USA-made goods among Chinese consumers, as they have threatened, you get the sense that the mood could change suddenly and quite drastically and that, to us, could be quite devastating. It is a very real concern and quite unnerving!”

Markus Theinert of Conn-Selmer expressed similar concern, observing that, “The current escalation in tariffs is certainly not helping for the global trade with musical instruments, components, accessories, and even raw material. Our industry is very connected across all borders and the potential impact on the business in both countries is definitely something we will have to watch closely.”

It would be difficult to argue against those points.

All of that being said, nobody I spoke with expressed having encountered anything in the way of a “hostile vibe” between attendees or exhibitors, of any nationality – which is both unsurprising and, nonetheless, somehow reassuring. Heads of state may rattle their financial sabres at one another, but that type of aggression need not extend into the world of MI.