President Trump this afternoon finally announced his "reciprocal" tariffs, and it's not good news for photography fans in the US.
Managers at the Japanese camera makers are all currently huddled around big tables trying to figure out how they're going to weather the massive tariffs against their products in a market that comprises about a quarter of their sales. Meanwhile camera dealers across the US are already looking at the recent small uptick in sales with fond memories.
As with anything Trump, the details seem murky, somewhat contradictory, and subject to change, but the way things are being read right now is that starting on April 9th, shipments to the US are subject to:
- 24% tariff on imports from Japan
- 36% tariff on imports from Thailand
- 46% tariff on imports from Vietnam
- 34% tariff on imports from China (in addition to previous 20%; also deminimis avoidance is cancelled)
(Note that as I update this, various publications are reporting different numbers for China and different interpretations of how the new 10% tariff on everything works with the reciprocal tariffs. If you'd like to read the actual declaration Trump made, you can find it at whitehouse.gov.)
Canon has a majority of their production in Japan. Nikon has the majority of its production in Thailand. Sony manufactures in both those countries. OM Digital Solutions manufactures in Vietnam. So you can see that someone's going to be taking it on the chin, perhaps everyone. Note that Nikon's Z5II announcement was likely priced with some potential tariff accommodation in mind, but I can assure you Nikon was not expecting 36% tariffs on their gear coming into the US. I suppose the only good news for camera makers is that smartphone makers are also locked into the same nonsense.
Interchangeable lens cameras have not been made in the US since Kodak cancelled the SLR/n over nearing two decades ago (and that was basically reassembling a Nikon DSLR into an American made body). We're not likely to get anyone thinking about making them again, even with substantive tariffs in place, so for photographers, the tariffs really represent a new tax on gear. A tax that is likely to be constantly changing as the administration starts to discover exactly what chaos they're creating and tries to adjust their toupees policies. Of course, they don't care about the camera market—it's not big enough to offset anything they want to do—so it may be worse for photography than it is for other markets that have some sort of leverage to trigger renegotiations.
You may remember that after the US election last fall, I cancelled plans for changes and expansions to my business. I anticipated this chaos. You cannot plan into total uncertainty; the likelihood that you'll waste both your time and money is not just high, but presumable. As it is, retaliation by other countries will likely impact my ebook business, and I may have to put a geofence on purchases because of that (a one person business cannot easily handle 200+ reciprocal grudge tariffs).
While I try to avoid political discussions, today's announcement reminds me that most people don't know the difference between ignorant and stupid. Ignorance is when you don't know that you shouldn't do something. Stupidity is when you shouldn't do it and know what the outcome is likely to be, but you do it anyway. The US's newly stated tariff policies are stupid.
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Oh, you wanted the bulleted bottom line? Then:
- Camera gear in the US will get more expensive because it will all be tariffed.
- Predicting what you'll have to pay for new gear will get impossible as tariffs may change, and if inventory piles up, there will have to be sales of some sort.
- Sales of camera gear will slow as the economy slows.
- More camera dealers will close their doors because they live off of sales turns, and those will go down at higher prices.
- Many items will get harder to find in stock as camera companies shift new product shipments to non-tariff nations.
- Repairs will take longer, as no camera subsidiary wants to bring in extra parts they have to pay tariffs on.
- Repairs will cost more, as the tariff has to be recovered for the part that they waited for.
- Camera companies will listen to American customers less, as we'll be a smaller part of their overall sales.
- Cheap Chinese accessories will go up in price because the loophole they were using (deminimis) is now closed.
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Bonus coverage: What do the macroeconomic models say about price increases and/or tariffs?
First, a caveat: macroeconomic modeling is never right. The actual economy is more complicated than we can model, and people's behaviors can alter over time, making it mathematically more difficult to come up with a perfectly accurate assessment. Moreover, there are several hundred different macroeconomic models available to run (and more that are private), and they differ in some of their economic assumptions. Keynesian and Friedmanian assumptions have some key differences, for example. That said, models do produce useful results to consider, and many recent models tend to predict within a narrow band from what actually happens. We're not yet to the Seldon level of mathematics, but we do have tools that are useful and have proven to be within a reasonable margin of error.
I tried a few different models to try to get a sense of what might happen with near universal tariffs. But the simplest model is the most direct and easiest to understand (and most likely to be further off from the final result). Here's what it says: if you apply a 25% price increase to all products in the GDP, inflation of course jumps to reflect that. Indeed, this would be called hyper inflation. In response to that level of inflation, the Fed will almost certainly have to raise interest rates more than the inflation rate to try to keep that from becoming the start of runaway inflation. Meanwhile, the GDP goes down over 6%, which is a severe recession. Jobs don't tend to get hurt much short term, but wages don't track with inflation at all. The problems get worse over time.
Now, the tariffs range from 10% to 54% and don't apply to all products, obviously. Some native-made products will escape a forced price increase. However, corporate behavior is pretty predictable. If you make widget in the US that sells for US$1 and all the competitive widgets from overseas sell for US$1.10 to US$1.54, you're going to raise your price, at least up to the level where you still get the sale. This is why I used a midrange (25%) value for price increases in the model.
This also introduces us to the notion of sensitivity to inflation. What happens to the GDP at different inflation levels? At somewhere between 5 and 10% inflation, the GDP goes from growth to contraction. Between those two numbers (5% and 10% inflation) interest rates would likely double.
If we run the simplified model at a lower 15% overall price increase to all products (some will be more, some will be less, which again introduces a bit of unpredictability), we get a very bad result: recession and stagflation. Stagflation is what happened to Japan in the 90's and from which they're still trying to recover from today. Repeated fiscal stimulation (low interest rates, direct stimulus, etc.) simply built up the debt-to-GDP ratio to over 200% in Japan. Coupled with the proposed renewal of the original Trump tax cuts along with promised new ones, America would be doing the same thing Japan did: increasing the deficit without getting economic growth.
I simply want to remind everyone in the US reading this article of a simple truth: this is what you voted for (surprise: I didn't). Despite his denial, Project 2025 was clearly always going to be a central goal of a second Trump administration. He also telegraphed much of his expected policies in his first administration, but there were still a few adults in the room at the time that helped restrain him. Not so much this time.
The sad news is that there are Republicans in the House and Senate who understand what I just wrote and know the likely consequences of supporting the President, but do so anyway.
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Further Update: So now that the press has been able to ask questions and get responses, we now see the "formula" by which Trump calculated tariffs. It's nonsensical. Moreover, we've now read through all the tariff schedule, and guess what, we're going to tariff penguins and one of our own military bases 10%! No, you cannot make this stuff up—oh wait, the one with the weave actually did make it up—but if you don't believe me, try reading TechDirt's full analysis and explanation. Anyone who thinks the whole tariff schedule shows great leadership is just showing their own stupidity. I can't say that more plainly.
