Piano World Home Page Forums Our Most Popular Forums Piano Forum Will tariffs on Chinese imports increase used piano values?

Interesting. I haven't followed this too closely...

4.7 to 25% is roughly a five-fold increase, but about 20% more than before in terms of the rate. Since wholesale price to dealers is roughly half of SMP, than the import cost is even lower, so I'm thinking that this will translate to less than 10% to the end consumer. Not insignificant, but not necessarily a showstopper either.

This is a problem for retailers specialising in Chinese pianos.

Retail margins get crushed unless stores can bump prices up say 10% above the annual "piano inflation rate".

But, stores are struggling as the US piano market shrinks, US wages have been stagnant for decades, and general inflation is pretty high. I just don't see much room for the retailers to pass on the tariff to mid-wage customers who buy these pianos.

Based on simple estimates of these threads:

____________Now___Later
SMP.................100.......100
Cust discount...(20).......(20)
Wholesale cost.(50).......(50)
Added tariff...................(10)
_______________________
MARGIN............30.........20

Somehow after the tariffs, a store's margin will still need to cover: salaries & benefits, rent, advertising, financing, utilities, taxes, profits.

Well, if things get too bad, perhaps Chinese pianos will migrate though a 3rd party country on their way to the USA. As once said in a movie.....Life will find a way...........

IMHO the trick is to find some of the better new Chinese pianos available in showrooms still without the new added cost. They could represent some of the best buys presently on market.

Norbert

How many months inventory do you think are in stores right now?

Just buy a (used) European/Japanese piano, they are better.

If the 25% Section 301 duty were extended to Chinese pianos, it would be in addition to the current 4.7% that would continue to apply. So the combined rate would rise to 29.7%.

Larry.

I don't think that the prices of used Chinese pianos will be affected at all. This is primarily because I don't think that any tariffs that are part of this current process will be in place for very long.

For those who are still interested in this topic, the U.S. Trade Representative (USTR) published his list yesterday of the products that are proposed to be added to the products from China subject to the additional 25% Section 301 tariffs. Acoustic upright pianos (HTSUS 9201.10.00) and grand pianos (HTSUS 9201.20.00) are on the new list, as are electric keyboards (HTSUS 9207.10.00), together with musical instruments generally and parts for all of the foregoing (lots of classifications in HTSUS Heading 9209).

A public hearing is scheduled in Washington for June 17, 2019, which is also the due date for submission of written comments in response to the proposal. Unless there is a more general resolution with China that makes these Section 301 tariffs go away, or persuasive instrument importers talk the USTR into removing these items from the list, my guess is that they will become subject to the 25% tariffs somewhere around the end of June.

Larry.

There are so many more used pianos on the market than there are buyers that I seriously doubt that demand could rise enough to significantly affect prices.

As to new piano that are made in China, the overwhelming %age are manufactured by Pearl River, and they are owned by the Chinese government. This assures them of price protection.

That's an interesting comment. If Pearl River dropped their invoice price 19%-20%, the 25% Section 301 tariff would be offset, and of course Pearl River, a Chinese producer, would feel an impact from the tariffs. Which is one of the arguments the government raises in support of these China Section 301 tariffs. I would be very interested to hear whether anything like that really happened, or whether U.S. dealers (and their customers) would simply be left to deal with the 25% increase in landed cost created by the tariff.

Larry.

If it happens I will likely be told. I'll try to be "transparent".

Oh yea.....no politics!!!

It depends on what percentage of Chinese piano manufacturing is exported to the US. I’m just guessing here but the biggest impact from tariffs would be all the smartphones, and other electronic devises.

China is a net importer of pianos (i.e. more are imported than exported). And the vast majority of their production is sold domestically.

Yes. Which is one of the reasons why Steve Cohen's comment above particularly interested me. Pearl River might easily be able to absorb a 20% price reduction on pianos to the U.S., thereby negating any retail price increase in the U.S. that might otherwise result from the next round of the USTR's Section 301 tariffs.

Larry.

Yeah, while the import/export numbers may seem high to us, shipments of pianos to the US is probably a relatively small number.

Of course if I was a Ritmuller, Pearl River, or Hailun dealer in the US, I’d be rather concerned.

Even with a 25% increase in price Hailun pianos are still attractively priced.

iLaw,
If a Chinese manufacturer did cut prices on pianos exported to the USA, wouldn't that be considered "dumping"?

Are action parts subject to the same tariff? Are any of you rebuilders concerned about the price of Chinese action parts rising? I have heard that the very popular WNG action parts are made in China. What sort of impact would this have on your business?