The G20 summit is coming to Argentina on Friday, and this could mean big news for the security industry, as President Donald Trump and Chinese leader Xi Jinping are expected to meet regarding the ongoing trade war between the two countries.
The U.S. and China have been going tit for tat imposing tariffs on one another, with Donald Trump telling the Wall Street Journal as recently as Monday that he may impose tariffs on an additional $267 billion of Chinese imports if no deal is reached. Tariffs on $200 billion of Chinese goods are already set to increase from 10 to 25 percent on Jan. 1. The Security Industry Association has identified 29 categories within the list of products seeing an increase in tariffs that could negatively affect the global security industry.
“The idea of a trade war and tariffs in general would be extremely counterproductive,” said Jake Parker, director of government relations at the Security Industry Association. “Our concern is that tariffs are a tax on businesses and consumers that raise the domestic price of items, and the security industry is extremely competitive on cost. Sometimes the equipment is actually provided at a loss by the integrators or dealers and recovered over time, so the tariffs are essentially increasing the costs for the integrators and dealers [in the U.S.].”
Parker said that while the 10 percent increase could probably be absorbed by consumers or suppliers, businesses — especially small businesses — will really be hurting from the proposed 25 percent increase.
“You’re increasing the direct cost of some important components that are widely used in the industry,” Parker said. “In many cases there’s not a realistic set of alternative [supply] sources that businesses can switch to realistically or affordably, so larger companies may be able to use their size to leverage better deals. Smaller companies that make up the bulk of the industry — they are in the worst position to be able to do that."
Some products facing this 25 percent tariff increase that the SIA has pointed out as affecting the security industry are electronic burglar and fire alarms, control panels, automatic data processing machines, audio technology, copper, lead-acid storage batteries, video surveillance cameras and door hardware. It is essentially impossible to run a security business without these components, and incredibly complicated for smaller companies to switch suppliers to avoid the tariff impact.
For now, businesses must play the waiting game, and hope that the U.S. and China reach a truce before the new year. Trump and Xi Jinping have been wishy washy on whether the tariffs will even be discussed at the G20 Summit, and both countries seem reluctant to back down — so who knows how far these tariffs could go.