“I have been in the process of trying to sell the company. It’s a difficult time”: Trump’s tariffs could be about to decimate the gear industry

Electro-Harmonix Morgan and Fender gear
(Image credit: Electro-Harmonix/Morgan/Fender)

Despite President Donald Trump’s tariffs being aimed at backing American companies – with a view to making America great again, of course – it looks like, for much-loved American music brands in particular, his measures may be having the exact opposite effect.

Take for example long-standing audio specialists Electro-Harmonix who’ve been making analog and digital audio signal processing pedals, boxes and gizmos since 1968.

Now, speaking to Bloomberg Electro-Harmonix founder Mike Matthews has spelt out the dire situation Trump’s measures have placed his company in.

“The hope is that with very deep inventories on most all of our pedals we make, we can ride out this storm,” says Matthews hopefully. “[But] we’re gonna have to continue to buy our raw materials from overseas, even with the tariffs.”

The fact is that simply not manufacturing in, or purchasing from, abroad isn't an option for most American-based music instrument makers.

“The global supply chain has allowed us to make high-quality, affordable products, and it’s taken decades to do that," explains John Mlynczak, president and CEO of NAMM (the National Association of Music Merchants) in another interview with Billboard.

"When you start raising the price everywhere of what it costs to import goods, it’s challenging, and it really threatens everything we’ve learned to do as an industry."

Brother, can you spare a dime?

And price rises across the board seem inevitable at this stage. The founder of boutique tube amp maker Morgan Amps, Joe Morgan took to Instagram to spell just what the tariffs will mean for his business and your next Morgan Amps purchase.

“Not trying to be political but just did some hard math last night trying to determine how these 25% tariffs will affect my business,” Morgan begins. “For every dollar I spend in manufacturing it costs the consumer $3.50. Manufacturing costs + my profit margin + dealer profit.

“So when my parts cost increase by 25% for the materials coming from Canada (transformers, aluminum, wood) it increases the cost of an AC20 DELUXE by $300. This $300 in manufacturing costs ends up costing the consumer $1050.”

“I work on a THIN margin,” he continues. “I do not factor in my labor on any amp I build as I see my profit margin pay for my salary and all ancillary costs.

"To increase my costs by $300 for goods I would need to recover these costs in margin. I will not work for free.”

And it’s not just the ‘boutique’ US gear brands that seem set to suffer. Even giants such as Fender – thanks to its international supply chain and major Mexican business – are feeling the brunt with credit ratings analysts Moody’s downgrading their prospects and sending shock waves throughout the industry.

Its re-rating amounts to a slam on the anchors for future investment with the company predicting a rise in operational costs of “approximately $20 to $25 million” purely due to the increased cost of their requirement on overseas components.

So while Fender still has “strong brand recognition and market position in the acoustic and electric guitar categories” and “benefits from good geographic diversity and a long-standing reputation for high-quality products… these strengths are offset by the company's narrow product focus and earnings volatility.

“This volatility is further exacerbated by the current challenging economic environment and exposure to new US tariffs," Moodys explains.

Fact: Overseas manufacturing makes the US gear business work

“One thing we’d like people to understand is the reason why we have companies that can afford to build their highest-end products in the US is because they have the revenue from the mid-to-entry level products from overseas," reckons NAMM’s Mlynczak

Sure enough, the latest figures from the US International Trade Commission state that 989,621 acoustic guitars were imported from China and 187,722 acoustic guitars were imported from Mexico in 2024.

“Our supply chain is deeply interconnected. It’s not like an instrument is solely made in China or Mexico.

"What happens is you have certain components that are made really well in China that are then imported for final assembly. Or you have a factory in Mexico that has a specialty in making certain components that are imported. Then they are assembled in the U.S. This happens because this work is highly specialised.

So isn’t the answer to simply bring manufacturing into the States, as President Trump would like?

“It’s not that easy,” says Mlynczak. “What we’re building are not generic widgets that come off a line. These workers around the world are trained to understand how to test musical products, to buff the bell of a brass instrument perfectly, to tune the strings on a violin.

"There are handmade components to these instruments that take – in some cases – decades to do right. These factories often have multi-generational workers. This isn’t a skill set you pick up overnight.”

“Trump’s policy on tariffs will definitely bring very big companies into America for manufacturing, but small and medium companies, their volume will not be big enough,” agrees Matthews. And bringing EHX entirely within the States? “That would be a really huge investment,” Matthews worries.

Indeed, EHX has already been moving their sourcing to avoid dependence on a Chinese component market made uncertain through Trump’s trade tariffs. Meanwhile the company owns a vacuum tube facility within Russia – a country which already has a 35% tariff against its imports and has its own worries…

And now having successfully sourced components from Taiwan, the company's profits and ability to trade are now back in the firing line again.

And this cuts both ways

“American-made instruments are really coveted by musicians around the world. It’s a double whammy. The squeeze is really real," worries Mlynczak.

“Our customers’ buying habits are like a pyramid. There is a very, very small market for the highest tier, custom instrument models, but it is very wide at the bottom. You can’t have that custom shop model at the top without the support of a very wide entry-level bottom.”

And the squeeze on long-established American brands such as Electro-Harmonix is now, it seems, likely to push the company over the edge. So much so that Matthews has been seeking a way out.

“I am open and have been in the process of trying to sell the company. It’s a difficult time,” he says. “I’ll have to scratch my chin to think about it – you know, can I still make a profit?

Daniel Griffiths

Daniel Griffiths is a veteran journalist who has worked on some of the biggest entertainment, tech and home brands in the world. He's interviewed countless big names, and covered countless new releases in the fields of music, videogames, movies, tech, gadgets, home improvement, self build, interiors and garden design. He’s the ex-Editor of Future Music and ex-Group Editor-in-Chief of Electronic Musician, Guitarist, Guitar World, Computer Music and more. He renovates property and writes for MusicRadar.com.

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