Commercial Integrator + Security Sales - January/February 2025 - 8

AV BRAINS & BRAWN
Supply Chain and Uncharted Waters
The possibility of new tariffs could have a significant impact not only on consumer prices but
also on the supply chain. By Alan C. Brawn
IN THE AV INDUSTRY, we design and
build projects using the tools of our
trade. Since the 1930s, this has involved
both B2B and B2C buying and selling
of products. A manufacturer provides
products that we buy and sell to our customers.
The value we add lies in designing and
integrating these products into systems that
(hopefully) work seamlessly.
We originally bought products that were
made in America. However, over the last
50-plus years, we have increasingly bought
products that were manufactured overseas.
For many years, the country of origin
was Japan; recently, however, Mexico,
China and Canada have risen to the top.
As astute observers will note, this
article is about supply chains. Do not
change the channel now, because this is
about to affect all of us in the commercial
AV industry again.
Reared Its Ugly Head
Most recently, the issue of supply chain
reared its ugly head during and after the
COVID-19 pandemic. Oversimplifying
things, those shortages were caused by an
insufficient supply of certain components
that were critical parts of the technology
we buy and sell. The result was that the
supply chain slowed up, or, in some cases,
shut down completely. Most (but not all)
of these issues have been mitigated to
a certain degree, and the supply chain
currently appears relatively stable. The
key words there are " currently appears. "
The weak link in the chain is our
reliance on outside resources and the
apparent necessity to import products and/
or components from foreign countries. The
obvious answer is to make everything in
the U.S., right? As we know, there are issues
with some raw materials, manufacturing
capabilities, labor and the 800-pound
gorilla of cost. In the context of existing
trade policies, our government must
consider how to strike a trade balance
Be aware; prepare as much as you can in light of the possible imposition of new
tariffs and potential ripple effects in the supply chain that might result from them.
and assess what is economically feasible.
Suffice it to say that the cost structure of
manufacturing varies greatly from one
region to another.
In the U.S., a " perfect world " would
mean having an exact balance of trade
between imports and exports. As a point of
refence, in January 2024, the U.S. imported
$324.6 billion and exported $257.2 billion
in goods and services. To go a bit deeper,
we should consider two of the U.S.' major
trade goals: (1) to protect American IP
and (2) to prevent foreign manufacturers
from dumping. Dumping takes place when
foreign producers sell a product in an overseas
market at a price lower than the price
they charge in their domestic market. In
such a case, the exporter is often trying
to gain market share or harm domestic
competitors in the importing nation.
The 'Perfect World' View
We all know that this " perfect world "
view is aspirational. We have had varying
degrees of success (at best) trying to make
it the case. Probably the best example of
challenges relating to both IP protection
and dumping is China. We have come to
rely on their uncontrolled and unpaid-for
use of our IP, and their inexpensive man8
Commercial Integrator+Security Sales & Integration | January/February 2025
ufacturing of finished goods and parts, to
keep consumer prices in the U.S. in check.
One tool our government has used to
respond to trade issues has been imposing
tariffs - a tax on imports. Governments
often impose them to protect national
security, bolster domestic businesses and
raise revenue. At one level, this seems like
an effective approach. Simply charge more
and, thus, you'll raise export costs and
level the playing field. But not so fast. This
is much, much more complex and involves
walking a tightrope with consumer prices.
New and Uncharted Territory
This is where new and uncharted territory
comes into play. Late last year, President
Trump announced that he planned to " ...
sign all necessary documents to charge
Mexico and Canada a 25% tariff on all
products coming into the United States.... "
If history is any indication, that means
the supply chain will be affected and price
increases will likely follow. The point here
is to become aware and prepare accordingly,
as best you can. CI
ALAN C. BRAWN, CTS, DSCE, DSDE,
DSNE, DCME, DSSP, ISF-C, is principal of
Brawn Consulting.
RAINISTER/STOCK.ADOBE.COM

Commercial Integrator + Security Sales - January/February 2025

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