With U.S. President Donald Trump suggesting that he will set a tariff of “anywhere between 15% and 50%” on countries ahead of the looming August 1 deadline, musical instrument firms continue to grapple with how the tariff fluctuations and changes over the past couple of months have impacted – and will continue to impact – their business and longevity.
In an interview with Reuters, D’Addario CEO John D’Addario III revealed that the widely established, family-owned accessories company has a specific task force set up to strategize how they should respond to the current trade war.
While the company makes nearly all of its products in the U.S., its supply chain and distribution are global – exporting nearly 45% of what it makes to 120 countries, with the biggest foreign market being Japan.
“We estimate that we have incurred anywhere between $500,000 to $750,000 in additional costs that we didn’t plan for, already this year,” asserts D'Addario.
Raw materials – or derivatives – are a key issue. For instance, D’Addario consumes large quantities of copper rods used to wind different types of strings. Trump’s promise of a 50% copper tariff would undoubtedly skyrocket their costs.
“The problem is we don’t really know the origin of the copper we’re getting – whether it’s from a domestic source or imported,” D’Addario reveals. “But it’s more likely there will be a cost increase for us, even if it is a U.S.-based supplier.”
Forced to react quickly after the U.S. started raising tariffs on China, the company’s task force found ways to change how D’Addario ships Chinese-produced goods to non-U.S. customers.
“We can literally, if we need to, divert shipments that are on their way to the States to other markets where we have our own entities. So stuff that's on the water intended to go to the U.S., we can divert if needed to different parts of the world to avoid the tariffs.”
And while, in the past, Chinese factories resisted directly shipping smaller orders, “as a result of tariffs, our Chinese suppliers suddenly became much more accommodating.”
Other tariff-battling initiatives include applying for permission to create a free trade zone in part of their warehouse in Farmingdale, both for assembly work as well as to hold imported products, so that they only pay tariffs when they actually need to be used to supply domestic orders.
However, this is far from a quick fix. It will, most likely, take over a year to get the necessary approvals and prep the facility. And despite the company’s best efforts, the tariff bill is hefty, to say the least – expected to hit $2.2 million by the end of 2025, compared to $700,000 last year.
Nevertheless, D'Addario remains somewhat positive. “At the end of the day, I think what we have to concentrate on is things that we can control – things like onshoring [and] creating a foreign trade zone.
“Those are things we can control, and we'll continue to do those things so that we can preserve our company's presence and strength in the market.”
Other companies – especially smaller ones – aren’t as optimistic. Back in May, the CEO and co-founder of the Ohio-based EarthQuaker Devices shared that the business is at risk of going bankrupt amid tariff uncertainty.
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