Imposition of Tariffs and Approach to Professional Audio-Visual Industry: Anticipations and Tactics
Tariffs have always sparked heated discussions, and the latest wave affecting Canada, China, Mexico, and Europe is no exception. For our Pro AV industry, this turbulence is causing unease, particularly since profits are currently thin. system integrators, independent production companies, independent contractors, and others involved in the sector are feeling the pinch. Some major projects are being delayed or fast-tracked just to escape the impending tax.
Here's what you need to know.
*[Pro AV Growth Slows but Accelerates]***
As companies serving the AV market grapple with the situation, they're exploring potential solutions. For instance, a Canadian company specializing in videoconferencing equipment and AV devices announced a 10% price hike on their products – but rescinded it swiftly after the tariffs were delayed, only to be reinstated later.
These tariffs, which took effect on March 4, slap a 25% tax on all steel and aluminum imported into the States. As of now, the tariffs are back on track for an April 2 start date. A 10% tariff on Chinese goods is already in place and continues to loom. However, Chinese components in Pro AV manufacturer's product lines might not significantly affect the list price for manufacturers, since they have some tolerance for acceptable profit margins.
Our requests for comments have received no responses from certain companies – not surprising, considering the volatile nature of the topic. But we've managed to gather some insights on the matter.
Aluminum Truly is Everywhere
Canada, being the leading supplier of aluminum to the States, accounts for nearly 60% of all imports. Many products used in the Pro AV industry, such as camera housings, tripods, production switchers, servers, control panels, equipment racks, and other hardware components, rely on aluminum.
Grass Valley, based in Montreal, uses aluminum in its LDX series camera chassis and housings for a balance of strength and weight. The company promptly informed its customers that it would honor the current pricing on all orders placed and delivered by March 31, 2025.
Before the tariffs were rolled out, products from companies like Cisco and Crestron, which were manufactured in Mexico, typically crossed the border duty-free under the USMCA – a trade agreement between the United States, Mexico, and Canada. Without the USMCA’s perks, these same products will now cost manufacturers a hefty 25% more, a burden that will inevitably be passed onto customers.
Negotiating the Muddy Waters
Some companies are considering absorbing some of the new tax to shoulder the burden for customers. Others may emphasize their “Made in America” products, which are exempt from the new tariffs, to lure customers. Meanwhile, Chinese and Mexican manufacturing activities are crucial to many U.S. companies. These companies may inventively bypass the tariffs and cut costs by purchasing parts in these countries, while assembling products stateside.
Brock McGinnis, VP of Sales and Operations at Nationwide Audio Visual, a full-service AV integrator based in a Toronto suburb, shares that some equipment sellers like his are receiving help from Canadian benefactors. "Most of what we buy is made in Mexico," he stated. "When the tariffs are finally enforced, the AV world is gonna be in a lot of pain. Because the issue is highly political here in Canada, we already have both public sector and private clients agreeing to pick up the extra costs if/when. Not sure U.S. domestic clients will be as generous."
Clearly, tariffs will cost the Pro AV industry money and could cause customers to hesitate on projects. With installation projects, delays can translate into added labor costs for rehiring personnel later down the line.
"There's a lot of soul searching going on inside companies that serve the Pro AV market about how are we going to attack this," McGinnis said. "The reality is we're gonna have to pay the higher price. So, do we either pass it along to our customer or negotiate a deal where we won't raise the price if you buy more equipment, or something like that."
While tariffs present challenges, the Pro AV industry is known for its adaptability, and companies are likely to find ways to minimize the impact and navigate through this hostile environment.
- The volatility caused by the imposed tariffs has led some Pro AV companies to consider raising the prices of their products, such as a Canadian firm that initially announced a 10% price hike on videoconferencing equipment and AV devices.
- In an effort to mitigate the effects of the tariffs, some companies are contemplating absorbing a portion of the new taxes, highlighting their "Made in America" products, or strategically purchasing parts from Mexico or China to assemble products in the United States and evade tariffs.
