With the recent imposition of a 10% tariff on goods coming from China, it remains to be seen how both manufacturers and distributors decide to pass along these cost increases to the trade as well as the consumer in both the near- and long-term. In my opinion, most will take a wait and see attitude over the next few weeks to see if these cost increases will either be rolled back or remain in place based upon China’s reaction to the cost imposition. Bear in mind, its entirely possible that not only will the tariffs remain in place but they could increase further should the Administration feel it necessary to raise the stakes even higher if China isn’t getting the subtle message or decides to retaliate. Trump had threatened a 60% tariff during his presidential campaign so now that he’s in office anything and everything is on the table. Presently, its not clear if certain manufacturers — among them Hobby Master, Panzerkampf and a few others — will be affected by the tariff and whether or not companies operating outside China will pick up sales by not being affected by the tariff.
Keep in mind that its entirely possibly that the new Administration will up the stakes even further by placing an across-the-board tariff on every currently that does business with the US, all in an effort to demonstrate to the world that we mean business. Over the weekend, both Canada and Mexico, our nearest neighbors and close allies, saw a 25% tariff imposed upon them, so it isn’t a stretch that even more allies will get the same treatment.
So, as we start 2025, things aren’t looking especially great in the commercial space unless something substantial occurs by one or both parties. Geo-political events being what they are, it could be a situation where one side is waiting for the other to blink before they can formulate a response to the US initiatives. It isn’t a pretty scenario and one that will undoubtedly lead to a scarcity of product and higher prices for what does come into the country.