Are Tariffs Hurting 12 Volt?

On Wednesday, President Trump signed a partial truce in the trade war with China leading to changes in tariffs that affect the 12 volt market.

The new agreement calls for a reduction in the tariffs on speakers including subwoofers and tweeters, Bluetooth speakers and headphones to 7.5 percent, down from 15 percent earlier.  Whether head unit tariffs will also fall is still unclear.  One supplier said wiring kit tariffs fall to zero, but we were unable to confirm this. More information should be available over the next 30 days.

The tariff on amplifiers is expected to remain at 25 percent.

Looking at the impact of the tariffs to date, almost all retailers we polled said they have seen little to no impact in sales.  But suppliers say it has hurt their bottom line.  One estimated that tariffs sliced profits for the industry by at least 10 percent in 2019.

But whether sales were hurt is still uncertain.  Epsilon found that its sales, surprisingly, were impacted only 2.1 percent. Ronnie Brashear, Epsilon VP Sales had expected a higher hit. The category most affected, he said, were head units, as many are made outside of China, so those sourced from China were at a singular disadvantage.

Another supplier said low end amplifiers were hurt because most are available online and so consumers can comparison shop.  Some high end amplifiers are kept offline, so the price is the price, even if there’s a $100 increase.

Since June 15 last year, when amplifiers were hit with a 25 percent tariff, amplifier sales have fallen, according to the NPD Group.  Car amplifiers and speaker dollar sales combined were down 3.5 percent and unit sales were down 7.5 percent from June through October 2019, compared to the same time period in 2018, it said.

Several suppliers at CES said they moved manufacturing to countries other than China last year including Maxxsonics, Soundstream and American Bass. Factories were shifted to either the Philippines or Korea, they said.

Overall, under the new trade agreement between the US and China, the latter has committed to buy an additional $200 billion of American goods and services by 2021 and to take actions against theft of intellectual property of US companies. For its part, the US agreed to reduce tariffs on $120 billion in Chinese products from 15 percent  to 7.5 percent. See news on the trade agreement here.

See the full trade agreement here.

Photo: Fox Business