Everyone’s excited right now about the changed tariffs – both proposed and actual – being imposed by the United States. But what about airgun industry tariffs, specifically?
Firstly I need to make it clear that I am not an expert on tariffs, or any other kind of taxation. Nor am I an expert in predicting the future. If I were, I would have made a fortune on the stock market long ago…
Most importantly – this is specifically NOT a political discussion. That’s waaaay beyond my pay grade. I’m simply sticking to simple airgun business issues and things I can see from my very limited perspective.
But I do think it’s worth a discussion about what the proposed US tariff changes may mean for the airgun industry going forward. You see, it’s clear to me that tariff changes could make significant changes to the products that we buy and love to use.
Of course, the whole US tariffs issue could blow over and things to back – more or less – to normal. But personally, I’m not betting on that: at least in the short term. And, it’s possible that some tariffs could actually go down, with resulting price reductions.
Get a coffee and sit down. It’s a rather long read…
General Tariff Basics
Tariffs are levied on the imports to a country at the place they arrive. They are paid by the importer and are part of the “landed cost” of the product concerned. Just about every country has them. They’re a part of everyday commercial life.
Historically, US tariffs have been relatively low by many international standards.
HAM looked at airgun industry economics – in an incredibly simplistic way – in this story last year. So let’s take that same $100 BB pistol that we used for our example…
In this example, I assumed our $100 BB pistol actually cost the “brand owner” $25 including shipping (from Asia) and 4% Import Duty. That would be the landed cost.
So – sticking to that $25 cost and using VERY APPROXIMATE numbers to make things easy – if there’s a 10% tariff, that will be an additional $2.50 per gun. A 20% tariff would be plus $5.00 per gun. At 100% tariff rate, the tariff would be $25.00.
But it isn’t that simple, as these costs become magnified as they pass through the distribution chain until we buy them at the final price. Again our previous story gives a basic explanation.
This means that even small changes in tariffs can have an appreciable effect on the prices we pay.
Airgun Industry Tariffs Basics
It’s no secret that the current and proposed US tariff changes effect primarily China and other low-cost countries in the Far East.
It also seems that some large, powerful industries can exert enough leverage within the USA to have the proposed increases not apply to them. The computer industry appears to be an example of this, as we have seen in the past few days.
Many big companies have correspondingly “deep pockets”. So they can – for example – stand the cost of transferring manufacturing from one country to another if they feel they have to. But it takes time…
Large companies might also have the financial reserves to ride out the current US tariffs situation.
So it’s at this point that we need to stress that the world-wide airgun industry is a small one. It’s composed of (relatively) small manufacturers, small distributors and smaller dealers. It’s unlikely that any company in this industry has deep enough pockets to either move production or ride out a difficult economic situation.
Then there’s the issue of how much of this relatively small global market does the US represent? I don’t know the answer to this, but I’ll guess that – overall – the US represents 50% of the total world airgun market. This could be important, as we’ll discuss later…
Finally, US consumers have long been accustomed to relatively low prices for physical goods, compared to many other countries. Sure we may think we’re paying a lot for our airguns (and other stuff), but they likely are relatively more expensive in other countries.
Plus, of course, the results are going to be different for each individual company.
Airgun Industry Tariffs – High Level Guesses
So – looking into my very cloudy crystal ball – some basic guesses could be as follows…
US-manufactured products will be relatively advantaged as their production takes place in the USA. However, it’s just about guaranteed that they include at least a few parts imported from abroad and so their costs could increase from tariffs on those parts.
Airguns imported from European Union countries and Turkey will probably suffer relatively less from US tariffs than imports from the Far East. It’s even possible that tariffs on products from these countries could end-up lower than they are today. So Germany, Spain and Turkey, for example, could benefit relatively compared to airgun manufacturers in the Far East.
Where a US “brand owner” has a high proportion of its production sourced from China or the Far East, the company could be stressed. This is particularly true if the the brand owner has the majority of its sales in the USA. That’s going to be a tough situation…
Then there are some segments of the airgun industry where – so far as I am aware – just about all of the development and manufacturing expertise is in China. HPA compressors form one obvious example. What will happen here? Dunno…
Riflescopes and just about any other optics associated with shooting are also overwhelmingly developed and manufactured in the Far East. Certainly the lower-cost ones. What will happen here? Dunno…
This is where market size can be important. Some companies may decide that they can survive by simply not selling into the USA. If they sell enough in the rest of the world, it’s possible that they can manage just fine.
So some airguns may disappear from the US market. Don’t laugh at this possibility, early indications of this are already happening in the photographic industry where FujiFilm has apparently suspended deliveries of some China-manufactured digital cameras to the US. Demand for these products is so strong in the rest of the world that they can do this and sell them elsewhere.
Those are my thoughts on changing airgun industry tariffs in the USA. Again, I’m not an expert in any of this stuff – I’m just describing what I see and can guess. And I could definitely be wrong – my wife will confirm this ;-)
But it’s clear that there will be both winners and losers in the industry we love – at least in the short term.
If you would like to comment, please do so in the spirit in which this story was written. That is, airgun- and business-related. No political stuff, please!
The post Airgun Industry Tariffs In The USA. A Business Perspective… appeared first on Hard Air Magazine.
