Three years since the end of the COVID-19 pandemic, and the world is still reeling from global supply chain shocks. Growth has generally been slow, energy prices are high and international shipping has struggled to return to normal. And now, to add insult to injury, we're witnessing a sudden tariff war between the world's largest and second-largest economies by nominal GDP – namely, the United States of America and the People's Republic of China. We have all just seen some dramatic swings on international stock markets.

Quite understandably, this has created uncertainty and anxiety worldwide, and the global consumer electronics industry has been hit hard. But how does this affect audio and video products, specifically? I do not speak as an economist, but rather as a hi-fi enthusiast and industry watcher who has had a number of conversations with manufacturers and distributors at both a local level and globally. Here is what I have surmised…

Donald Trump's dramatic US tariff increases are said to be designed to bring world leaders to the table for negotiations about the trade surpluses that many countries have with the USA. Add a sprinkle of chaos, which is another proven negotiating strategy, and for the most part, the US President has already succeeded in gathering decision-makers to open discussions on his terms.

To date, China has been more on the receiving end of this strategy than other individual countries and, unsurprisingly, has swiftly retaliated. Those living stateside have already seen dramatic price increases, not just with hi-fi but consumer electronics in general. China is the world's largest producer of the latter and accounts for nearly one-third of global electronics exports, approaching 1 trillion US dollars' worth, according to 2023 ITC Trade Map data. Southeast Asian countries such as Japan, South Korea, and Taiwan also produce serious quantities of consumer electronics, as does Germany, but they are still significantly smaller than China. And even well-known and proudly 'Made in the USA' products rely heavily on components manufactured in China.

So, at the time of writing, it's clear that this developing trade war will greatly impact the USA. But how about other countries around the world? In recent years, we have experienced supply chain disruptions for reasons as diverse as the global pandemic, the Ukraine war and a huge fire at a silicon chip manufacturing plant owned by AKM in Japan. These have had major ramifications, such as Mercedes Benz's inability to deliver new vehicles because many of its wiring looms are manufactured in Ukraine. Aeroplanes use more silicon chips and semiconductors than just about any other product, and when in short supply, they took priority over consumer electronics devices.

When it comes to manufacturing, the world now operates on the Japanese kanban style of 'just-in-time' production. Components are produced around the clock and shipped to factories, warehouses, and companies for immediate assembly as new orders arrive. This well-oiled machine works spectacularly when all is well, but disruption can bring things to a grinding halt. For example, surplus products may be returned or redirected, and established freight links must be rerouted. Semiconductor manufacturers now need to raise their prices to offset the lost revenue that will most certainly come from the lower US market demand. The same applies to raw materials suppliers for steel and aluminium and parts such as RCA phono sockets, HDMI connectors, and even power cables.

The global effects are already being felt as manufacturers adjust their pricing strategies to offset tariff-related losses. For enthusiasts in the USA and the rest of the world, there is likely to only be a limited window of opportunity to purchase before inevitable price increases.

In the audio industry, most brands work on a traditional distribution model where the manufacturer sells in bulk to a regional distributor (typically one per country), and retailers purchase smaller quantities from the distributor. Retailers hold only small amounts of stock, while distributors generally operate larger warehouses. Your purchase today from a retailer may have only landed in the country sometime in the last three to six months, at most. The next order the distributor places will likely already carry tariff-related adjustments. Hence, the window of opportunity to purchase at today's prices could only be four to eight weeks until the pre-tariff inventory runs out.

For stateside audio enthusiasts, the situation is worse. The market will struggle to adapt to prolonged tariff costs – at least until Presidents Trump and Jinping shake hands and supply chains and pre-tariff pricing are restored – and who knows how long that could take? So at the moment, it is surely a good time to buy local. And fortunately many foreign manufacturers now produce some form of audio electronics or loudspeakers locally. The more local its machining, components, and assembly are, the less affected it should be by tariff or supply chain issues – and therefore consumer prices are less likely to change.

Donald Trump's slogan is 'Make America Great Again'; one of his key aspects is to be less reliant on trading partners and more on local manufacturing. The idea is that this will create more jobs and drive the local economy harder. On a philosophical level, that's hard to argue with, but two (or more) can play that game – and the rest of the world will likely act more locally, too. Ultimately, if we support our local manufacturers, every country will benefit, and our homegrown brands could thrive and prosper. So whatever purchasing decision you make, the window of opportunity may only be a matter of weeks, not months.

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