April 11, 2025
The Impact of Tariffs on the ProAV Industry
New tariffs are reshaping the ProAV industry, driving up costs and uncertainty while prompting strategic shifts in sourcing and supply chain management.
EIDIM Group Inc
Quick look
Tariffs are increasing equipment costs and complicating project planning across the AV sector.
Companies are exploring domestic and alternative international sourcing to reduce tariff exposure.
Market shifts are leading to new supply-demand equilibriums and pricing challenges across the global AV supply chain.
First, let us discuss what tariffs are. According to the Council on Foreign Relations (CFR), tariffs are a form of tax applied to imports from other countries. Economists note that these costs are largely passed on to consumers. Countries have used tariffs to protect domestic industries, such as agriculture and renewable energy, and to retaliate against other states’ unfair trade practices. During his second term, President Trump again wielded tariffs to achieve goals such as stopping drug trafficking, competing with China, and reducing the U.S. trade deficit.
As new tariffs take effect, the professional audiovisual (ProAV) industry is bracing for significant shifts. Industry leaders, installers, and equipment sellers are being informed of price increases on nearly all products. What will be the overall impact on the AV industry?
AVIXA Economist Peter Hansen outlines several key factors that will influence how the industry adapts. In this article, we will delve deeper into these factors: Uncertainty, Cost, Domestic Sourcing, Equilibrium Effects, and Leveraging to Minimize Tariff Exposure.
Uncertainty
The introduction of tariffs has injected a significant degree of unpredictability into the ProAV market. Companies now find it challenging to forecast costs and make informed decisions due to rapidly changing trade policies. This uncertainty complicates long-term planning and investment, as firms must remain agile to adapt to sudden policy shifts. Moreover, the complexity of global supply chains further exacerbates this issue, making it difficult for businesses to anticipate costs and availability. A good example is when in 2019, the U.S. imposed tariffs on Chinese-made electronics, several AV integrators reported delays in quoting large-scale projects due to sudden price fluctuations in essential components like LED displays and video processors.
Cost
Tariffs directly impact the cost structure of ProAV products, leading to increased prices for equipment and components. These additional costs can strain budgets for both providers and clients, potentially resulting in project delays or cancellations. For instance, the AVIXA Pro AV Sales Index (AVI-S) indicated a slowdown in growth, partly attributed to these rising costs. We can use this example: A university had to postpone the installation of a new lecture hall AV system when the cost of imported projectors and display panels increased by over 20% due to tariffs, pushing the project over budget.
Domestic Sourcing
In response to tariffs, some ProAV companies are exploring domestic sourcing as a way to mitigate additional costs. While this strategy can reduce exposure to tariffs, it also presents challenges. The ProAV industry heavily relies on global supply chains, and finding domestic manufacturers for specific components can be difficult. Even when domestic suppliers are available, tariffs on imported components used in production can still increase overall costs. Additionally, increased demand for domestic products may drive up prices, reducing the financial advantage of local sourcing. One example is when a Texas-based AV integrator began sourcing racks and metal enclosures from a U.S. supplier instead of a Chinese vendor. While this avoided tariffs, the cost savings were limited due to increased demand and longer lead times from the domestic manufacturer.
Equilibrium Effects
The market is experiencing shifts as companies adjust their strategies in response to tariffs. These adjustments can lead to changes in supply and demand dynamics, which in turn affect the pricing and availability of ProAV products. Understanding these equilibrium effects is crucial for businesses to navigate the evolving landscape effectively. The equilibrium effect can be something like this: As demand for non-Chinese LED wall panels surged in 2020, manufacturers in South Korea and Taiwan raised prices due to limited supply, leading to a new pricing equilibrium that affected project budgets across the ProAV sector.
Leveraging to Minimize Tariff Exposure
ProAV firms are adopting various strategies to minimize the impact of tariffs. These strategies include diversifying supplier bases, renegotiating contracts, and exploring alternative markets.
A global AV distributor shifted part of its procurement to suppliers in Vietnam and Mexico, successfully reducing overall tariff exposure by 30%. This move allowed them to maintain pricing stability for their North American customers despite ongoing trade tensions.
By proactively addressing tariff exposure, companies aim to maintain competitiveness and protect profit margins.
The ProAV industry faces a multifaceted set of challenges posed by new tariffs. However, by understanding and addressing factors such as uncertainty, cost, domestic sourcing, equilibrium effects, and leveraging strategies, businesses can better position themselves to adapt and thrive in this evolving environment.
Sources:
https://dexonsystems.com/news/tariffs-and-the-AV-industry
https://www.avnetwork.com/news/avixa-report-pro-av-growth-lifts-as-uncertainty-poses-challenge
Follow us on social media and visit eidimstore.com for more information!
Sign Up
Join countless others receiving high-quaility, curiosity-inducing content every week.
