Lewis CaliburnU.S. tariffs will be affecting imports of various goods crucial to the smart home technology sector. This decision has the potential to put pressure on smart home professionals who specialise in custom installations and integrations of advanced technologies, such as home automation systems, audiovisual equipment, security features and energy management solutions.
This means professionals could face significant operational challenges as they attempt to absorb increased material costs or pass these expenses on to consumers.
CEDIA Chairperson Alex Capecelatro, CEDIA Global President and CEO, Daryl Friedman, and trade policy experts from the law firm Greenberg/Traurig, Rob Mangas and Laura Siegel Rabinowitz have identified the following three key actions for smart home professionals to take in order to stay ahead of the game:
1. Analyse your supply chain
The first step in mitigating tariff related risks is understanding which of your products or components may be affected. By proactively reviewing your supply chain, you can better anticipate potential price changes and plan accordingly.
“Supply and demand govern you. It’s reasonable to expect some kind of a price increase, but we definitely can get expected demand is going to go up significantly, and therefore U.S. production should go up significantly. Hopefully, the capacity is there in a manner that doesn’t really result in significant price increases, but it’s something everyone’s going to be closely monitoring,” says Rob Mangas, Government and policy lawyer.
2. Review your purchase agreements and contracts
With tariffs introducing cost rises and potential fluctuations, it’s crucial to review existing agreements to understand how these tariff costs will be allocated.
“You need to know where your products are coming from, that you have purchase agreements for what country they’re coming from, and potentially the source of the components of those finished products. It’s important to do a risk analysis,” says Laura Siegel Rabinowitz, international trade lawyer.
3. Update contract language to address tariff related costs
Any agreements should include protective language to safeguard against tariff related price increases. Taking this proactive approach reduces the risk of unexpected changes.
“This is the time to revisit agreements that may have been signed before the new presidency started. Check if there are actually provisions that cover who bears the tariff responsibility and what happens if it changes after the production date, and then, certainly for new agreements, it’s important to add language to protect you know, whoever you are in the supply chain,” says Rob.
“If you are a purchaser from the importer, you want to protect yourself, knowing that the price that was calculated when the production agreement is negotiated may not be the actual price of the product when a date of entry, because duties are due and tariffs are determined at date of entry, so it’s not date of production agreement. So that’s why you have to really look at your production agreements carefully and edit them, if you can, to make them, you know, to protect yourself for a date of entry.”