Watch Out Vinyl, Tariffs Are Coming For You

As we all know, one of the many bright spots in the music industry recently has been vinyl sales. Even though the sales figures can be deceptive as to the actual number, it’s still a large revenue source for the just about everyone in that particular food chain. That said, the growth of vinyl is threatened today thanks the the new tariffs the government has recently put in place, thanks to increased production costs.

It turns out that the raw materials required to press a record in the U.S., which include nickel, PVC, paperboard, and steel, are directly affected by these extra fees. Not only that, lacquer disc production (the master disc that make the stampers) are only made outside the United States these days since the Apollo Masters fire, and there are no Direct Metal Mastering machines operating in the U.S.

These materials all have seen their costs raise by double digits so that U.S. pressing plants end up paying a premium, and of course that’s passed along to U.S. record buyers.

Imports Are Free

So here’s what’s interesting.

You can have a vinyl record made outside the U.S. but import it tariff-free.

This is because an import record is considered a cultural item and there are protections in place against tariff fees being added.

The Scary Part

Over the last 10 years, and even through Covid, vinyl sales exploded to the point where there were not enough pressing plants in the U.S. to keep up with demand. Wait times for a pressing expanded to as long as 9 months, but the industry responded by bringing new plants online. The number of pressing plants in the United States swiftly went from 21 in 2015, to the current number of 40.

This isn’t often thought about, but one of the things that often happens when a company like a pressing plant is having revenue problems (in this case due to slower sales due to the higher costs passed on to consumers), then it’s acquired by a competitor.

Since all domestic pressing plants will face the same problem, it’s unlikely that a domestic entity will step in to make the purchase. Instead you’re likely to see some acquisitions by European companies, which may mean that we lose the whole industry to foreign investment just because of some questionable tariffs.

The vinyl industry was just humming along until the beginning of the year, but the worst may be yet to come as the higher manufacturing costs get passed on. It’s been estimated that if the tariffs aren’t rescinded within about 12 months or so, we may be back to ground zero with the format, a place that no one wants to be.

Tariffs are hitting musical instruments and audio gear hard already, but you now add vinyl records to the list as well.