“The back-and-forth raising of tariffs between the U.S. and Chinese governments that we have witnessed this past week will have serious business implications and create consumer turmoil for the music products industry,” read a press release issued by NAMM on April 15. “The effects of these sudden and unpredictable tariff actions will have a long-term effect on musicians worldwide.”
If anything, the above is an understatement. The current – and ever-changing – tariffs are putting many industries in immediate peril, but for a realm such as MI, in which profit margins are already generally fairly slim and in which so many products and components are sourced – by necessity – abroad, it’s alarming and represents a very real threat.
We decided to reach out to folks in the industry to get some true, “boots on the ground” feedback regarding these trade restrictions. Not surprisingly, very few out there were at all approving of the measures. Also not surprisingly, percentage-wise, most declined to go on-record for fear of alienating clients, colleagues, and customers. As one such individual remarked, “This is the single most lame-brained, idiotic approach to international trade and global relations I’ve seen in my lifetime. Unfortunately, some of our partners voted for the person who’s making it all happen and I can’t put those relationships at risk by publicly denouncing his actions. It’s unreasonable, because observing that these tariffs are a very bad idea – in general and for a host of reasons, but especially for the music products industry – isn’t political, it’s just a fact.”
Fortunately, there were many who did agree to speak with us.
Colin Schofield, vice president of Sales & Marketing for JodyJazz/Chedeville/Rousseau notes that the tariffs have already “been extremely detrimental. Our business in the USA remains very stable, but what was once a very profitable and flourishing export business to China has of course now been stopped in its tracks by the prohibitively high retaliatory tariffs. But even beyond China, the general uncertainty in the entire global economy caused by the tariffs is a great concern.”
“As reflected in the general turn in the economy, our dealers report reduced retail sales as consumers have become more cautious about spending,” adds
Francois Kloc, president and CEO of Buffet Crampon USA. “This, of course, reduces their need to purchase more inventory from suppliers like us.”
Jerry Goldenson, president and CEO of KHS America, adds, “The global economy has always been difficult to navigate and some changes were or are needed. Unfortunately, the drastic approach that has caused concern and strife for so many has only increased the level of economic uncertainty. It is uncertainty that paralyzes our growth and desire to invest and/or spend money on things like musical instruments.”
And it’s not just American companies that are feeling the pinch. As Steve Long, president Yorkville Sound and Long & McQuade says, “For the offshore production and ART products, these have basically been put on hold at the new pricing, as there is no way anything would sell at post-tariff pricing.”
“The end-user/consumer will be the first to suffer as price points inevitably rise to accommodate the increased import duties/tariffs, which will have the biggest impact upon entry level instruments,” observes Paul Smith of John Hornby Skewes & Co. Ltd. “This could have a devastating effect in the longer term on musical instrument sales, whereby families will not have the spare finances to spend on musical instruments curtailing any chance of starting their musical journey.”
Suffer Now, Thrive in the Future?
Of course, the end-goal of the administration’s tariffs is to return manufacturing to the United States, manufacture more jobs, create a more level playing field in terms of global trade – in short, to “Make America Great Again.” So how’s that working out so far – and how will it work out? Are these tariffs and related moves ultimately going to help domestic businesses, workers, and consumers?
“I do not believe these tariffs are protecting U.S. manufacturers in any way at all,” asserts Schofield. “They are doing far more harm than good. As a USA manufacturer who relies upon exports for over 60% of our business, all the retaliatory tariffs are extremely detrimental. The biggest problem is that too many people don’t understand how tariffs work. They don’t understand that it is the importer who has to pay the tariff, not the exporter. So, when they hear the administration boasting of the ‘millions’ of dollars in revenue they are generating from the tariffs, they don’t understand that money is actually coming from the U.S. companies who are importing the goods! So, it is US companies who are penalized and being harmed by the tariffs! And ultimately those U.S. companies are going to put up their prices to U.S. consumers to offset the cost increases of the tariffs.”
“No they are not [helping the U.S.],” says Long. “For a U.S. manufacturer, input costs are going up, and they will also lose access to foreign markets due to counter tariffs.
It might be beneficial in some industries, I don’t know, but I don’t see any situations in our industry where anyone producing domestically will be helped.”
“Currently there are no U.S. manufacturers able to deliver products at the price points we can achieve via manufacturing in China,” adds Smith.
Kloc agrees, saying: “Generally speaking, we believe the increased tariffs will cause more harm by leading to increased prices for consumers and reduced margins for manufacturers and retailers.”
From the Trenches
“We generally keep deep supplies of materials on hand, so we have not yet experienced any cost increases yet. We have always chosen to keep several months’ worth of supplies available and so we should be good for a while yet.
“For our export business it is our overseas dealers and distributors who have to pay the retaliatory tariffs that their own countries impose upon American made goods. If these tariffs stick, then they will have no choice other than to raise the price of our products to the end-users in their market potentially making them less competitive against non-USA-made alternatives. Because of the on again/off again nature of the tariffs, most of them are waiting to see what happens before raising prices. But if the tariff situation is not resolved, then they’ll have no choice but to raise prices on our products.
“Because we have not yet had to absorb higher costs for materials, we have not yet had to consider raising prices in the USA. But that would always be the absolute last resort. China is its own unique situation because of the tariff war. In the rest of the world, we have not yet had to consider pricing changes because of the on again/ off again nature of the tariffs. If the tariffs return, we might be compelled to actually lower our prices for international dealers and distributors, absorbing the margin loss, to help offset the import tariffs they face. This would be the only way to ensure our products remain competitive in their markets. Hopefully if such a scenario does unfold it will only be temporary, but who can tell at the moment!
“As stated above we have not yet experienced any disruptions because of the deep supplies we keep on hand. But we are looking at alternate sources for materials so that we have the flexibility to efficiently switch suppliers should the need arise.
“Our manufacturing is already 100% in the USA. We’re trying to stay flexible and ready for whatever changes we might need to make. We are keeping a close eye on what’s happening with tariffs so we can be prepared. By working with both local and international suppliers, we’re aiming to keep things running smoothly and avoid big disruptions later on.
The only certainty is uncertainty. The administration could decide to end these practices tomorrow, or they could continue to play out over the next 4 years. No one really knows.”
Colin Schofield
Vice-President of Sales & Marketing Worldwide
JodyJazz/Chedeville/Rousseau
“From Yorkville Sound’s point of view, on the products we make in Canada, there has been little affect, because they qualify for the North American Free Trade Agreement, and therefore are not subject to any tariffs.
“We don’t buy any components in the U.S. but there are some problems with products that we buy from the U.S. to put in our Canadian Production as they are subject to the Canadian counter-tariffs. We had to put prices up, [and] sales have, of course, slowed down on the affected categories
“We are not sourcing right now as we have to wait to see how this plays out… We have no idea where this is going.”
Steve Long
President
Yorkville Sound and Long & McQuade
“We see [cost] increases on all our products, and most significantly on those produced in China. While we have not had to adjust any pricing yet, we have started to calculate the adjustments that will be necessary to offset costs at the current tariff level. Fortunately, the inventory we have on hand is ‘tariff-free’ and we have emphasized this to our dealers and encouraged them to take advantage of the opportunity to purchase now.
“We have currently suspended deliveries from all our factories for anything that is not absolutely necessary. There is no change to our current sourcing strategy.
Because we are a manufacturer who produces over 95% of the products we sell in our own factories, we have better control of our production and deliveries than those who rely on 3rd party sources for their products.
“There are some products that simply cannot be replicated domestically. As a company comprised primarily of ‘legacy’ brands, most of which are literally hundreds of years old, the identity of these brands is tied to the countries and regions they originated from and the generations of instrument makers there who produce them.
“If tariffs remain at the current rates, we can expect to see increased prices at every level from manufacturer to retailer to consumer. This will be unavoidable and necessary to maintain a sustainable margin and will certainly affect the ability for some consumers to buy or rent musical instruments.”
Francois Kloc
President and CEO
Buffet Crampon USA.
“[The tariffs have] had an immediate negative impact on JHS as a UK based brand owner selling into the USA. Our USA distributor customers are holding back from importing any goods which have had an increased tariff levied upon them.
We are based in the UK and already have a small scale UK production facility for our Vintage ProShop series – producing custom built electric guitars & bass to the customers’ specifications. We plan to upscale the production capacity to offer Made in the UK instruments to the USA market.”
Paul Smith
Managing Director
John Hornby Skewes & Co. Ltd.
“The global economy has always been difficult to navigate and some changes were or are needed. Unfortunately, the drastic approach that has caused concern and strife for so many has only increased the level of economic uncertainty. It is uncertainty that paralyzes our growth and desire to invest and/or spend money on things like musical instruments. Although we believe music is an essential part of life, consumer, educator and dealer spend is focused on the needs of daily life. Gas, food, rent/mortgages, utilities, Insurance, et cetera are the essentials most are focused on.
“We have been preparing for the current worst-case scenario for over a year now. We have shifted production, when possible, to front-loaded inventories throughout 2024 and continued to look for ways to support our partners when and if needed. We have found out… It is needed! No one could have seen global tariffs at the rates presented and certainly not at the rates imposed on Chinese imports. We must remember that although we, as a company, absorbed the 7.5% original tariffs previously, we cannot nor can anyone absorb the 145%+7.5%= 152.5%! Music is never going away, but it will be a challenge to navigate the current chaos until a “New Norm” is established. We are committed to holding our prices as long as we are able, but inventory levels and availability will be critical for everyone.
“With many China-based manufacturers on pause, we will see many of the same logistical challenges we endured during the COVID congestion once shipping opens back up. For every week of disruption, it equates to 4 weeks of recovery. So above whatever the tariff settles in on, we will see inflated logistical cost due to capacity, availability and congestion.
Unfortunately many will struggle to withstand the most recent tariff related challenges, but we are all in this together and music will prove to be an enduring fact of life.”
Jerry Goldenson
President/CEO
KHS America, Inc.
“At Mr. Holland’s Opus Foundation, we support music education by donating musical instruments to underfunded K-12 public school music programs, ensuring that underrepresented students have the opportunity to learn and thrive through music. Recent tariff-related disruptions are creating new challenges. Many of the instruments we’ve already purchased are stuck in indefinite backorder, and we’re bracing for rising costs on future purchases. If this situation continues, it will limit our ability to secure the quantity and variety of instruments needed to serve the thousands of public-school students relying on us. These students deserve the chance to explore their creativity, build confidence, and experience the joy of making music, but ongoing delays and rising costs resulting from tariffs are putting that opportunity at risk.”
Tricia Williams
President & CEO
Mr.. Holland’s Opus Foundation
“So far, Reverb hasn’t seen any major shifts in consumer sentiment, with overall demand for music gear on our platform remaining steady. In fact, the average item selling price for used gear in the US is down nearly 1% year-over-year. Coupled with an increase in offer acceptance rates, meaning buyers and sellers are working together to find price points that work for both parties, the already tariff-free used market has become even more attractive. Further typifying this is the treasure-trove of data found in our newly-released Reverb Price Index. We believe this is the largest, most transparent database of data ever released to the MI community – and it shows that pedal prices, particularly on the used side, are continuing to come down to price points that buyers find attractive. Given that used gear makes up the vast majority of listings on our marketplace, and with most sales on Reverb taking place between buyers and sellers living in the same country – both in the U.S., where 85% of music makers on our platform reside, and abroad – we’re less prone to the impacts from tariffs. That said, we are starting to see a divergence between the price of new and used gear. Since the beginning of March, there has been an uptick in sellers increasing the list price for their new gear. On the other hand, we’ve seen more price drops on used gear – making used even more affordable.
Cyril Nigg
Senior Director of Analytics
Reverb
