Strap in everyone: prices of film and camera kit are about to rise in the US due to new tariffs, and a full on global trade war looks increasingly on the cards.
Well, we can’t say we weren’t warned. Just over two weeks into the new administration and President Trump has done exactly what he promised to do and signed an Executive Order announcing swingeing new tariffs on a whole range of goods from Canada, China, and Mexico. These countries have retaliated with the promise of their own measures, stock markets have dropped around the world, and the EU is now said to be next in the Presidential sights. A full on global trade war looks to be on the verge of breaking out.
This is not good news for anyone looking to purchase new kit in the US or, indeed, anywhere. While, for example, the manufacturer of most camera kit people will be looking to purchase is more than likely based in Japan, the actual manufacture of most of it takes place in China. This will now push prices up by 10%, potentially more as the tariffs can have a multiplier effect through the supply chain, though this will not happen immediately.
As CNN explains, “The additional costs on foreign-made goods will be paid by American importers, who typically pass those costs onto retailers, who pass them onto inflation-weary consumers.” Businesses will initially likely try and pass as little of this on as possible in the hope that it’s a very brief war, but most have limited room for manoeuvre.
Cameras, lenses, lights… the knock on effect will be huge. Yes, there is plenty of high quality, good industry kit made in the USA, but the majority of anything with a substantial number of electronic components in nowadays comes from Chinese factories. And that widens out to cellphones, laptops, monitors…the list goes on.
Meanwhile, the interconnected flows of global trade means that economic pressure at one point in the system tends to get passed on elsewhere. US tariffs will mean Chinese manufacturers’ sales may slow, leading them to raise prices elsewhere to make up for the shortfall. And there is always the spectre of inflation lurking in the background to act as a fun turbocharger on rising prices. Sure, the tariffs Trump imposed in his first time in office didn’t do that, but 2019’s were roughly a third of what is being set in motion now ($380bn of goods as opposed to the current $1.4 trillion), and then the pandemic came along and everything got economically weird.
Of course, everything might change and change fast. In a much-quoted analysis of the effect of the tariffs published in mid-January, the Petersen Institute for International Economics said that retaliation for any tariffs from Canada and Mexico “would be inconceivable.” As it turns out, Prime Minister Justin Trudeau has already announced a 25% tariff on C$30 billion of goods tomorrow when Trump’s tariffs go into effect, with four times that to come after 21 days if things don’t change.
In short, we are in uncertain times. And if you’re thinking of purchasing some new equipment this year, doing it in the next few days is probably a good idea.
Update: Reported in the last few minutes, Mexican president, Claudia Sheinbaum, has said the US and Mexico have agreed to “pause” tariffs threatened by Donald Trump for one month after the two leaders held “a good conversation”. Hopefully more to come with other leaders.