A Critical Look: Tariffs Exacerbate A Slowing Industry

tariffs_2018.jpg

When the White House announced it would levy tariffs on imports from other countries, it was only a matter of time before the hobby industry was caught in the crossfire. With the Chinese “trade war” ongoing with no end in sight, those tariffs have finally caught up with us, affecting radio systems and related equipment.

Horizon Hobby issued a statement to its dealer network Wednesday, saying “As you may already be aware, on July 7th the Office of United States Trade Representatives began imposing additional tariff charges, ranging from 10-25%, on a comprehensive list of products being imported from China. Certain Horizon Hobby products have been affected by this since that date.” They go on to say “On October 1st, 2018, we will be raising prices on select Horizon Hobby products including transmitters, servos, motors, receivers, and other items… Price changes will vary by product to ensure only the necessary price adjustment, with respect to the varying tariff impact on each item.”

On October 1st, 2018, [Horizon] will be raising prices on select Horizon Hobby products including transmitters, servos, motors, receivers, and other items.
— Horizon Hobby Email, 9/12/18

Horizon is far from the only company feeling the effects. Graupner USA also sent out a statement on the tariffs, informing us of a “8% to 15%” price increase on all electronic products. There are likely more companies that have not made official or public statements.

This comes at a time when the industry typically slows down, largely due to children getting back to school, the change in the seasons, and consumers beginning to save up for Christmas purchases. It is not clear exactly how these price increases will impact sales, but for our small store, this news is likely to suppress sales even further.

Additionally, the White House has threatened even more tariffs, covering nearly everything else coming in from China not already taxed. This would cripple the hobby industry. Consumers already complain about how expensive items have gotten in the last few years, and a new round of taxes will exacerbate the issue. The only remedy is to get Congress to act and constrain the White House, though this seems unlikely so close to the midterm elections.

In the end, hobby shops and their customers are left picking up the tab for a policy implementation that, while aimed at boosting the U.S. economy and protecting American jobs — which, make no mistake, are admirable goals — seems only to be making it harder for American retailers, especially small niche stores like ours, to operate. Hopefully the White House sees small businesses across the country hurting and adjusts their tactics to truly help American interests across the board.

In the meantime, expect prices to jump on various electronics in the store. I hope this is a temporary problem — with Christmas coming, it would truly be a pity for consumers’ dollars to buy less than they did only a few months ago.