SVS CEO Greets Sept. 1 Tariffs on His Speakers as ‘Less Draconian’ Than He Feared
In the weeks before the Trump administration’s announcement Tuesday placing finished speakers from China on List 4A for 10 percent Section 301 tariffs to take effect Sept. 1 (see 1908130028), SVS Sound “accelerated production” to beat the duties as best it could, CEO Gary Yacoubian told us Thursday. “We won’t have everything we need for the holidays” without further tariff exposure, “but we’ll have more than we would have,” said Yacoubian, a former CTA chairman when it was CEA.
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Yacoubian wishes “we didn’t just bounce from crisis to crisis,” he said, slamming the administration’s trade policy as “impulsive” and not good for business. “It freaks people out.” Though the 10 percent List 4 tariffs are “less draconian” than the threat to impose them at 25 percent, Yacoubian said he shares with others in the consumer tech industry “a sense of gloom and doom that this is never going to get figured out before the next election.”
The SVS CEO is “way less freaked out about this” than he was when his products faced the threat of 25 percent tariff exposure, he said. He admitted, though, he would “infinitely prefer to be on 4B,” the list of goods for which tariffs will be deferred to Dec. 15. Having been dealt the Sept. 1 effective date for new tariffs, “I feel like I have a game plan to navigate through this,” he said. He won’t “totally share” his game plan for competitive reasons, he said.
Since the 10 percent tariffs are “less an existential threat” than 25 percent duties would have been, the SVS sourcing strategy going forward “is less involving existing projects and more involving future projects,” said Yacoubian. He previously discussed SVS practicality studies that weighed shifts in sourcing from China to Thailand or the Czech Republic to escape further tariffs exposure (see 1906170018). “As we move into new products, new categories, we’re wide open as to where we build, as opposed to the way it was,” he said. “It’s not frantic at all. Let’s look at our options for every new project.”
Yacoubian found it "interesting that the market reacted positively to the announcement” Tuesday that many products like smartphones and videogame consoles would be spared the tariffs until Dec. 15, he said. “The reality was a lion’s share of products were still up for tariffs” beginning Sept. 1, including 100 percent of the SVS speaker product line imported from China under the 8518.21.00 and 8518.22.00 tariff codes, he said. Wednesday’s stock plunge, when the Dow incurred its worst single-day performance of 2019, reflected a “more considered understanding of the situation,” he said.