‘Negative Energy’ of List 4 Opposition May Have Swayed Trump to Delay Tariffs, Says Yacoubian
Widespread opposition to the List 4 Section 301 tariffs spawned “political blowback” that persuaded the Trump administration to delay implementing the duties, said SVS Sound CEO Gary Yacoubian. “I have a feeling that some of that negative energy influenced our administration to come back with some good news” from the G20 summit in Osaka, Japan, Yacoubian told us.
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SVS was facing the threat of tariffs of up to 25 percent on the finished speaker products it sources from China that would have hit 100 percent of its product line (see 1906200018). With the threat at least temporarily lifted, Yacoubian now feels “a little bit more like the captain of my own ship than I had been feeling,” he said. “All of us had been caught in this current that we couldn’t control.”
Yacoubian takes “nothing for granted” about the List 4 threat, said the onetime CTA chairman when the group was CEA. The threat of List 4 tariffs “could turn on any minute, again,” he said. “Only one person on the planet knows whether this is truly dodging a bullet or we’re just delaying a bullet,” he said of President Donald Trump. “He may not even know, because he can be very impulsive.” The White House and the Office of the U.S. Trade Representative didn’t comment Tuesday.
The situation, to Yacoubian, “feels again like a negotiation,” not the “ideological saber-rattling with no particular goal in mind” he perceived it was before the List 4 threat was lifted. He’s “absolutely supportive” of administration efforts to pursue a comprehensive trade deal with China, he said. “If the ship is not on the right course, then let’s try to get it on the right course, but let’s not sink the ship.”
Yacoubian thinks “anything is possible,” he said when asked if he fears the administration activating the List 4 tariffs with little notice. “There’s a sense of impulse in the current environment that’s just absolutely unprecedented, and I’m not just talking about trade policy. I don’t want to get political here. I’m a businessman.”
If there was a “healthy” outcome of the List 4 tariff threat, it’s that the “sense of denial for all of us is gone,” said Yacoubian. “Anyone with any sense running a business right now knows that if they’re building in China, they could be affected. That -- for me anyway -- is a good, healthy thing for me to be aware of.”
Yacoubian plans to use the List 4 reprieve to press ahead with his investigation into alternative sourcing from the Czech Republic or Thailand. “We’re continuing to do that math,” he said, estimating he’ll finish the arithmetic by the end of the summer. The List 4 threat, now at least temporarily subsided, “encourages the exercise of doing the math in the first place,” said Yacoubian. Before the threat, “I had no interest in building outside China, because we have good quality,” he said.
SVS “partners are investigating all kinds of ways of sourcing,” said Yacoubian. Building a powered speaker or subwoofer involves “a pretty complex ecosystem,” he said. “There’s lots of things going on, from DSP chips to small components.” Alternative-sourcing those goods from a complex ecosystem “doesn’t just happen overnight,” he said.
SVS has “boots on the ground in China that work for my company that drive quality assurance and a lot of other things,” said Yacoubian. “That wasn’t an area of my business that I was focusing on. Now it is. When you do that, you end up finding alternatives that you didn’t know were there. It could be that building in the Czech Republic ends up being the right thing, with or without the tariffs.” Even if the List 4 tariffs do “kick into place,” shifting production out of China is no guarantee, he said. “I don’t want to have a long-term solution to a short-term problem,” he said.