Could this be the moment the music falters? Economists at the Peterson Institute of International Economics (PIIE) have raised concerns about the impact of US President Donald Trump’s tariff policy on musical instruments, particularly guitars.
A proposed 60% tariff on Chinese goods could drastically affect the entry-level market, including students, teens saving for their first instruments, and underfunded school music programs. “The musical instrument market is highly globalized, and these tariffs will hit lower-income households and school music programs the hardest,” explained Cullen S. Hendrix, a senior researcher at PIIE. He added that production might shift to Indonesia, but at a significantly higher cost of 10–20%, affecting consumers worldwide.
Hendrix pointed to the globalization of the industry as a factor that has historically benefited both producers and buyers. “The irony is that the globalization of musical instrument production has worked well for everyone involved, including the United States,” he said.
Fender Musical Instruments Corporation, the world’s largest guitar manufacturer, exemplifies this trend. Fender produces its iconic Stratocaster in five countries: the United States, Mexico, Japan, Indonesia, and China.
“American-made Stratocasters are crafted by skilled luthiers and technicians, retailing for $1,200 or more,” Hendrix noted. Mexican-made versions, while using similar components, benefit from lower labor costs, retailing between $800 and $1,350. Production in Japan caters to local preferences with models priced similarly to US-made guitars.
Meanwhile, beginner-friendly “Squier” Stratocasters, made in China and Indonesia, are priced between $200 and $600, leveraging cost-effective labor and materials.
“This global supply chain allows Fender to serve a wide range of markets, from high-end collectors to beginners. Without globalization, far fewer people in the United States would be able to afford guitars, and American-made instruments would struggle to compete in the global market,” Hendrix explained.
The proposed tariffs would affect more than just guitars. Brass, woodwind, and stringed instruments also face higher costs. For example, Yamaha produces professional-grade trumpets in Japan but relies on Chinese factories for its entry-level student models. Similarly, Germany’s Sonor Drums manufactures its high-end drums domestically while producing beginner drum sets in China.
Hendrix highlighted the role of China and Indonesia as dominant exporters in the global musical instrument market, which is concentrated among a few major players. “The top ten exporters account for 85% of global exports,” he said, noting that the US, UK, and Australia are among the largest importers.
The impact of tariffs extends beyond instruments to raw materials like timber. A PIIE report revealed that tariffs could add at least $25 billion to timber import costs. For example, the tariff on Chinese furniture and plywood would rise from 16.2% to 60%, while Canadian softwood lumber tariffs would jump from 14.54% to 25%.
These increases would create a ripple effect throughout international goods markets. “A 60% tariff on Chinese goods would be a major shock,” stated researchers Julieta Contreras, Mary Lovely, and Jing Yan. They noted that following the 2018–19 US-China trade war, 62% of US imports from China are already subject to an average tariff rate of 16%, far lower than Trump’s proposed rate.
The potential tariff hikes have left industry stakeholders questioning whether the music industry—and aspiring musicians—can bear the burden of these increased costs.
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