Tariffs imposed by the United States have always been a cause for fierce debate. On the one hand, these taxes imposed on imported goods encourage businesses to build locally and inspire a “Made in America” pride. On the other hand, those same tariffs simultaneously cause the prices of goods and services based in targeted countries to increase for manufacturers—and, ultimately, customers.
For the Pro AV industry, the new tariffs being foisted onto Canada, China, Mexico, and Europe are causing great consternation, as manufacturing profit margins are currently low. In general, this is not good news for Pro AV. The consequences could negatively impact system integrators, independent production companies, independent contractors, and more. Already, tariff talk has already resulted in some large projects being delayed and others being sped up to avoid the tax.
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Companies serving the AV space are now determining the best way forward. For example, in early March, one Canadian company that makes videoconferencing equipment and AV devices sent an email to its customers stating it would impose a 10% percent increase on all its products, only to rescind that increase two days later, after the tariffs were temporarily delayed.
“When the tariffs are finally enforced, the AV world is in for a lot of pain.”
Brock McGinnis, Nationwide Audio Visual
Those tariffs, directly affecting the Pro AV industry and initiated on March 4, impose a 25% tax on all steel and aluminum imported into the United States. And they are back on again, scheduled for an April 2 start date. A 10% tariff on Chinese goods is also in place and will remain for the foreseeable future—but Chinese components, found in virtually every Pro AV manufacturer's product lines, might not affect the list price as much. According to some industry experts, the tariff might fall within the tolerance that manufacturers have for making acceptable profit.
SCN requests for comment for this article were (not surprisingly) declined by some companies; in fact, one company responded via email: “[We] are not interested in talking politics in such volatile times." But here's what we've learned.
Canadian Aluminum Is Everywhere
Canada is the largest supplier of aluminum to the United States, providing almost 60% of all imports. Vendors serving the Pro AV industry based in the country make many products using aluminum, like camera housings, tripods, production switchers, servers, control panels, equipment racks, and other hardware components embedded into larger systems.
Montreal-based Grass Valley uses aluminum in the construction of its LDX series camera chassis and housings, offering a balance of strength and weight. In an open letter to customers from company president Jon Wilson soon after the tariffs were announced, the company said that Grass Valley “will honor current pricing on all orders placed, and for delivery, on or before March 31, 2025.
“We recognize that pricing stability is essential to your business. Our teams are working diligently to prepare for and mitigate the effects of potential tariffs while ensuring continued access to the technology and support you rely on. We remain committed to navigating these market changes with transparency and fairness.”
Before the tariffs were imposed, products from companies like Cisco and Creston, which are made in Mexico, used to come across the border duty-free under the United States-Mexico-Canada Agreement (USMCA), a trade agreement signed by President Trump in his first term. Most of those same products will now cost manufacturers 25% more to ship, an extra cost that will surely, one way or another, be passed onto customers. If the levies hold, production equipment prices would likely increase in a month or two.
Some companies are considering reducing the burden on customers by absorbing some of the new tax. Meanwhile, some U.S. companies will remind customers their products are “made in America” and thus exempt from the new tariffs. A recent email from one such company noted that its "U.S.-based inventory is not subject to these new tariffs, giving you a unique opportunity to secure the hardware you need without the added costs.”
China and Mexico are home to key manufacturing activities for many U.S. companies. Some may legally navigate around the tariffs and reduce costs by purchasing parts there but assembling products in the United States, while others are exploring solutions.
Brock McGinnis, VP, sales and operations at Nationwide Audio Visual, a full-service AV integrator based in a Toronto suburb that specializes in institutional, healthcare, and commercial new construction projects, said that some equipment sellers like his are being helped by Canadian benefactors. “A lot of what we buy is made in Mexico,” he said. “When the tariffs are finally enforced, the AV world is in for 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 of if/when. Not sure U.S. domestic clients will be as generous.”
Making a Plan
Given the current economic uncertainty, those considering purchasing equipment may want to act soon to avoid higher costs. Many experts agree the tariffs will increase prices around Memorial Day, if not sooner. So, what can the industry do to mitigate the current hostile environment and keep the pipelines moving?
“I’ve heard talk a prudent thing for integrators to do is to stock up on inventory to keep international ordering low,” McGinnis offered. “Stocking up might be an answer to it. we are having conversations with our clients about bringing product in early to avoid the possible impact of tariffs. However, most integrators, other than perhaps those that are owned by big private equity type banks, really don't have the extra working capital to do that.”
Another option for U.S. customers to avoid the tariffs is to buy American-made products. Theoretically, that’s what the tariffs are all about. In a recent website post, California-based Shuttle Computers told customers that its U.S.-based inventory will not be subject to the tariffs. Plus, the company offered advice to integrators to help them avoid cost increases and potential supply chain disruption.
However, as we all know, most of the products and components used in the Pro AV industry have been made elsewhere and imported for years and typically cost less. That said, integrators can try to find sources from duty-free countries like Thailand, Indonesia, Malaysia, and Vietnam, which are all not currently on the tariff list.
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Clearly, tariffs are going to cost the Pro AV industry money and could cause customers to pause current projects. In the project install world, a delay can add extra labor costs of having to rehire personnel at a later date. The industry saw that during the pandemic, when many projects fell behind schedule and were scaled back considerably.
“I think 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 going to 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.”
