I really didn't want to prolong this discussion, but unfortunately a lot of misinformation is now spreading and we need to deal with it in order to have a reasonable discussion about how the photography business is going to be impacted by recent Trump actions.
One thing I'm noting is that everyone is getting one thing wrong about the tariffs; they all assume that a tariff is on the list price of the product. That's not true unless the customer bought the product directly from outside the country. The 36% tariff that NikonUSA would have to pay would come on the "price" that the subsidiary is "paying" for the unit—technically, a term called declared value—not the list price. So, if NikonUSA was getting a 50% discount from corporate on the import, and if NikonUSA chose to pass what they paid as tariff on to the eventual retail customer, then the additional price burden would really be more like 18%, not 36%.
Because camera dealers get such a small discount from the camera or lens maker—typically 15 to 20%—it's unlikely that dealers can absorb this new tariff burden. It's either going to be the camera maker or the eventual customer whose finances are directly impacted, perhaps both.
This unfortunately brings up another problem that we've had in the past but is likely to return: the parent company could "game" the declared value through the distribution path to help reduce the tariff impact. For instance, a product could be imported to NikonUSA for less than it is to Nikon China. That's technically illegal as it triggers "dumping" laws, though catching such actions becomes an enforcement problem. Moreover, whether or not the US would actively police such activity is unknown.
I believe there's a bit of a panic about how much prices will go up if Trump's tariffs stay in force. Prices will probably go up less than you think. But any increase that ends up in the 10-20% range is still going to be seriously felt by the photographic community. Note that B&H's Payboo "we'll pay the sales tax" change made for a significant shift in buying away from local dealers, and there we're talking about only a 5-10% cost-to-customer differential.
Ironically, the auto industry, which invested in North American production via a previous trade agreement with Mexico and Canada negotiated by Trump, might be harder hit than the all-imported camera industry. That's because the car makers counted on that agreement to target their investments, and ended up scattering plants across all three North American countries in ways where parts ship back and forth across the border two, three, four, and sometimes more times. Each time a part re-enters the US it would be tariffed under the new plan. So what happens is that the parts inside a car could go up in price significantly, which, in turn, can make the price of the car go up more than expected, even for autos assembled in the US.
In case you didn't get the irony, let me explain it more simply: an industry that does manufacture in the US (autos) may be hit harder by the Trump tariffs than an industry that has no plans to ever build in America. As with many things Trump, what he says ("bring manufacturing back to the US") is in direct contradiction to his actions.
So let's deal with that (manufacture in the US). As someone who's managed both over his long career—I've manufactured overseas and manufactured in the US—I have a pretty good sense of why you do one versus the other. When labor becomes the biggest element in your product cost, the tendency has been to shift production overseas, where labor is much less expensive. When parts are your biggest cost and labor is minimal, it often pays to manufacture in the US (as long as tariffs don't increase your parts cost ;~). But note that "labor is minimal" bit. If manufacturing is brought back to the US in any meaningful volume, it's likely to be robotic manufacturing. This does two things: (1) requires fewer workers; and (2) requires workers with different skill sets and knowledge.
Trust me, I get it. I understand what many of the Trump supporters have been saying and why the "Make America Great Again" slogan resonates with them. These folk desire for things to go back to some unspecified way they were at some "magical" point in time. Unfortunately, that's not the way life works. You don't get to "perfection" and then just rest on your laurels forever. You have to evolve based upon whatever forces are arrayed against you at any given time.
Wage increases measured in constant dollars have not really budged this century for those in the lower quartile (25%) of the population. If you're in the top 10%, then yes, you've seen clear wage increases. However, if you add in benefits (overtime, insurance, paid leave, retirement contributions, etc.), the story is one of real increase pretty much across the board, but still probably not at the level you'd desire if you're in the bottom quartile (and who wants to work overtime to get ahead?). [source: Pew Research]
The thing that the few that are writing me with complaints, and which they're not understanding about Trump's tariffs is this: they do nothing to increase wages, but they will do quite a bit to erode purchasing power. Moreover, these folk didn't seem to notice what happened coming out of the pandemic: "Between 2019 and 2024...low-wage workers experienced historically fast real wage growth (adjusted for inflation)." [source Economic Policy Institute]
What we're all fighting right now is perception. One side perceives a problem that doesn't really exist. The other side sees the response as a new problem that is being created. What next happens is that misinformation spreads virally through our now compromised media and social networks, and the differences in perception compound and escalate.
This month I finished endowing a new permanent scholarship at the Indiana University Media School: the Herbert A. Terry Ethics and Integrity in Media scholarship. I put my money where my mouth pen is: we're not being well served by media at the moment, partly because its ethics and integrity have been compromised. Hopefully, my small contribution will do some modest part in fixing that in the future.
In the mean time, this past week I've spent time away from discussing photography, writing articles or books, and reviewing new gear in my own attempt to make it clear that we have policies now in place that will potentially erode the photographic community in ways that are destructive, and for no clear reason. If you don't think that the photographic community is important to me, then you haven't been reading my posts for the past 30 (!) years.
I really don't want to prolong this discussion. However, if left in place Trump's tariffs will likely have more impact on the companies we photographers rely upon and how much we pay for our gear than any possible new product that might suddenly appear could have. Mine was one of the first Web sites (back in 2003) that expanded to cover what's happening economically in the photography market, and the tariffs are potentially the biggest such story so far, and we've already had some large ones (quakes, floods, pandemic, etc.). To ignore the tariffs would be saying I abdicate writing about economics at all. (Disclosure: my PhD work was in New Technology Economics and Management.)
I have a prediction about the tariffs. Trump's tactics have consistently been performative theater, not action. By that I mean he announces that he's going to do something and that a problem will go away, but rarely does it. In his first administration he dismissed NAFTA, the trade agreement that binds the US, Mexico, and Canada. His renegotiation resulted in some rewording, alterations in phrasing, and punctuation getting changed, but nothing actually substantive.
The high likelihood is that the tariffs as they've been announced cannot stick. Even if there are negotiations that happen, it seems unlikely that his key reason for applying them—reduce the trade deficit—will actually occur. Again, a lot of loud rhetoric, bullying, and challenging, but it's unlikely to create real action on the Presidentially-perceived problem (not that any action is needed to reduce the trade deficit itself, but that's a story for another Web site).
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Bonus: I keep seeing others similarly say that Trump's tariffs are just part of a negotiating tactic, basically bullying other countries into things we want from them. Perhaps. But one thing I've long written about is the unintended consequences of any statement or act. I once saw a well-known professional photographer pull up a blooming plant and put it where he wanted it in a scene. Well, that worked great for him, but long term that had plenty of other consequences, none positive.
One unintended consequence of the Trump tariffs is simple, and what I've been trying to point out: the photographic community now is stressing. It might get smaller. Companies we rely upon for gear are also now stressed. Dealers we count on are highly stressed and worried that this might be the end for them. An industry that doesn't really have—nor will it likely have in any foreseeable future—an onshore manufacturing presence will be hurt, and with it, those of us who use their products.
Some countries have already put up a surrender flag. Vietnam is offering to remove all tariffs on US products (though Trump's stated tariffs currently also require a 10% tariff no matter what, unless you're Russia or Belarus). What will come of that response is unclear. Mostly because Vietnamese tariffs aren't what were targeted and penalized by Trump: the trade deficit with Vietnam was.
Japan has some soul-searching to do, I think: they have a long list of food and animal related tariffs in place against the US, though neither side apparently cares if you import a camel (true: zero tariff on camels, both directions). The US has some reciprocal food and animal tariffs on Japan, but mostly chose to put reciprocal tariffs on other goods in response, such as pickup trucks. There's absolutely a negotiation that could take place between the two countries because of that. Whether it will or not is another story. Again, Trump is hiding his knee-jerk reaction to physical good trade deficits behind what he calls, but aren't, reciprocal tariffs.
But it is other unintended consequences that are the story for the moment: the stock market has cratered; inflation might not be controllable by the FED; the dollar is down in value; the economy is likely to slow; distrust in the US has risen around the world. There may be even more unintended consequences we haven't yet learned about. It took the US four years to essentially reverse course after the Smoot-Hawley tariffs went into effect in 1930. It took many years and a war before all the unintended consequences played out.
