Now that the stragglers are waking up to the fact that a tariff is a tax on the consumer (the importing company pays the tariff and then passes the increased cost to the consumer in the form of higher prices), there’s a growing realization how much pain this current fiscal approach is going to have on the economy.
All countries will be impacted, but for America, the combination of an own-goal and shoot-yourself-in-the-foot reality threatens to send the nation into recession. And, if we’re not careful, the rest of the world may follow.
All sectors of the music industry are watching U.S. President Donald Trump very carefully because the impact of these across-the-board tariffs is going to hurt. A lot. Here are just a few ways in which the pain is going to be administered. (This is the best available information — Trump may have changed his mind on some part of this over the last hour.)
Vinyl
Vinyl records are already stupidly expensive compared to CDs. The industry has responded to the demand by raising prices on vinyl records by nearly 25 per cent over the last five years. Labels know they’ll get these prices — so far. When I was out for Record Store Day earlier this month, I don’t think I saw a single full-length album on sale for less than $35. In a moment of weakness, I bought a three-track Geddy Lee record for $30.
If you think it’s bad now, just wait. The latest information I have is that the import and export of finished vinyl records is tariff-exempt beyond the usual duties. Finished vinyl and CDs are mostly covered under existing laws that prohibit the “banning or regulating ‘informational materials'” such as CDs and records, but we’ll see, won’t we? Besides, that’s only part of the story.
Much of the raw petrochemical byproduct that goes into making vinyl records, polyvinyl chloride, is imported by U.S. pressing plants from places like Thailand, a country hit with a weird 36 per cent reciprocal tariff. And it’s not the only issue.
Back in February 2020, just as the pandemic was starting to mess up our lives, there was a fire at Apollo Masters in California, one of only two factories in the world cranking out 80 per cent of the planet’s lacquer masters required for vinyl pressing plants, leaving a single, small plant in Japan to pick up the slack. The rest of the industry had to retool with a move to the more expensive direct metal mastering, which uses copper plates. New factories have been built at great cost. The good news is that, for now, reciprocal tariffs exclude copper.
Packaging for albums? That’s a paper product that’s sourced from, among other places, Canada. Like with toilet paper, another product where the raw materials are often sourced from Canada, Americans are going to be affected by higher prices because their album cover jackets will cost more to produce.
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Add in the increased cost of polyvinyl chloride and the lingering effects from the Apollo Masters fire, and vinyl prices in America will likely rise by perhaps another 25 per cent. What about for Canadians? We’ll probably end up paying more. How much? Again, it’s unclear, but I’d start budgeting for it.
Musical instruments
While many instruments are assembled in the US, there’s probably not a single one that doesn’t require raw materials or parts sourced from overseas. Gibson guitars are very American, but do you think that all those fiddly parts like tuning pegs are made in the U.S.? Nope. How about the components in the circuit boards used in Peavey amplifiers being assembled in Meridian, Miss.? There are many drum manufacturers still in the U.S. (Ludwig, DW, Gretsch) but where does the wood come from? Or the hardware bits? Moog synthesizers have several factories in the U.S. but rely on electronics from Spain and China.
How about some of the very fine Japanese and European instruments? Will they be tariffed more because of the foreign parts needed in their construction? This, of course, will disproportionately hurt smaller artists who have a hard time affording their gear in the first place. And when you can’t afford the basic tools of the trade …
Live Music
Looking at the live music sector, it’s obvious than no one at the federal level thought everything through.
Tariffs affect the following:
Concerts: Tariffs will cause inflation, pushing up the price for purchase and rental for equipment as well as production costs, something that will be passed along to fans in the form of higher prices for concert tickets. But that leads to another problem. We’re starting to see audience pushback on the price of a concert tickets. Coachella didn’t sell out (and 60 per cent of attendees reported financing their tickets). Beyoncé is having trouble moving tickets for her tour. Linkin Park had to downsize a hometown Dodger Stadium gig. And with so many things increasing in price, passing along tariff-related increases might not be so easy, especially when it comes down to between buying a ticket to a hot show and paying the rent.
Touring: Energy will cost more, so gas will cost more for everyone, from fans driving to see a show to tour buses and transport trucks sucking down diesel. This also trickles into accommodation, meals, and other travel costs for both performer and fan.
Visas and deportation fears: This isn’t entirely related to tariffs, but a lot of foreign artists are dissuaded from touring America because (a) the cost of a U.S. performance visa is approaching US$2,000, a cost that must be paid in advance. (Canada and other countries don’t have such charges). With all the stories about ICE deportations and visitors having their phones, tablets and computers examined by border officials, many foreign acts, especially lower and mid-level performers, are electing to avoid touring America altogether for fear of being turned away, arrested or deported.
Venues: American music venues that routinely host touring acts from other countries — and, in fact, depend on them for their livelihood — have fewer acts to book. Given that small venues have been feeling a serious economic squeeze since before COVID-19, they’re in trouble.
Music tourism: Talk to people in Nashville, Las Vegas, L.A., New York, or anyplace that hosts a large festival — Canadians and Europeans have their elbows up and are avoiding travel the U.S. for any reason. This also affects foreign participation in things like music festivals and conferences.
Sponsorship: If companies are paying out more in tariffs — consider the extra costs for making beer cans with Canadian aluminum — how much will be left over for sponsorship and music-related marketing?
Merch: Goodbye to the cheap T-shirt manufactured in Asia, acquired for $5 and then sold for $50.
Earnings impacted by the falling U.S. dollar: The American buck used to be able to buy you power almost anywhere in the world. As it falls against other currencies, it makes it more expensive for American acts to tour outside the country. And those artists accustomed to being paid in U.S. dollars for shows on foreign soil have been hit by that devaluation.
This is only the tip of the iceberg. Expect things to get a lot weirder in the coming months. Then again, Trump could have changed his mind on something in the time it took you to read this article. Again, we’ll see, right?
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