Film-Tech Forum ARCHIVE: Tariffs and the cost of Equipment

This is topic Tariffs and the cost of Equipment in forum Digital Cinema Forum at Film-Tech Forum ARCHIVE.

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Posted by Martin McCaffery (Member # 37) on 06-24-2019, 12:21 PM:

Sidestepping the political, has anyone heard anything definitive on what proposed tariffs on Chinese imports is going to do to the cost of projectors, parts and associated theatrical equipment?
Should we be hunkering down and put off any upgrades for at least two years?

Posted by Leo Enticknap (Member # 534) on 06-24-2019, 03:41 PM:

My impression is that relatively few models of projector, server, and audio equipment used in the cinema industry have final assembly in China (some Barcos do, or did, according to the data labels on them, but I don't see one very often). Of course a lot of the constituent components will be manufactured in China, though. My guess would be that it might have a slight effect on prices, but that the increase won't be as significant as it will be on consumer and office electronics products that are fully assembled in China, by the tens of millions of units per model.

Posted by Marcel Birgelen (Member # 6801) on 06-24-2019, 04:26 PM:

Ironically, it might have the biggest impact on Christie, as they still do most of their final assembly in the U.S., but many of the parts they order will come from China.

But consider Barco, who is still doing most of the final assembly of their flagship products in Belgium, can still order most components from China without paying import taxes and can then export it to the U.S. without the importing party currently having to pay any specific import taxes.

Posted by Leo Enticknap (Member # 534) on 06-24-2019, 06:47 PM:

Good point. If the final assembly of the product is in Belgium or Japan, then even if it uses a lot of components that originally came from China, then (I presume) as far as our government is concerned, for duty and tariff purposes, it's a Belgian or a Japanese import, pure and simple. But if the final assembly takes place in the USA using parts imported from China, then either the tariff is payable on those parts, or they try to find another source for them.

Posted by Steve Guttag (Member # 268) on 06-25-2019, 06:28 AM:

I know from a GSA standpoint, they look at multiple things. Is the product made in the USA but also is it made from at least 50% + 1 parts made in the USA to determine its country of origin.

I don't know who checks on all of this. I suspect it only comes up if you get caught.

Posted by Marcel Birgelen (Member # 6801) on 06-25-2019, 07:15 AM:

I think, in this global economy, this will be a costly puzzle to solve...

Consider a simple print inside a modern machine, where the print self was etched and the components on it were assembled in Japan, the raw print itself was made in Malaysia, the copper on the print came from Chile. About 50% of the components on the print were made in China, 10% were made in Taiwan (Now considered to be China or not?) another 20% came from South Korea, some 10 percent came from Germany and the rest from Mexico.

How do you decide where it was made? By the mass of the components? What if nothing exceeds 50%?

Posted by Mark Gulbrandsen (Member # 72) on 06-25-2019, 08:27 AM:

With all the rare earth materials used in making this equipment it would be near impossible to live up to the GSA requirements. Stuff literally comes from everywhere on the globe these days

Mark

Posted by Scott Norwood (Member # 30) on 06-25-2019, 11:26 AM:

Is the GSA 50% thing measured by weight, volume, or value? Or something else? Or is it just the number of parts (e.g. the machine has 1000 parts, so 501 need to be made in the US)?

How much of a D-cinema projector is really made in China? Certainly, lots of computer parts are.

[ 06-25-2019, 03:50 PM: Message edited by: Scott Norwood ]

Posted by Steve Guttag (Member # 268) on 06-25-2019, 03:48 PM:

Generally, it is by value. So if 50%+1 (of the value) comes from a TAA approved country, then it is from there.

So let's use the older servers as an example. The mediablock is where the $$$$ are in them, not the motherboard or the case. So if the Mediablock is made in a TAA country, odds are the whole thing passes.

So, on a projector, the imagers are going to be the big-ticket items and will carry more financial weight than the plastic covers or many of the other electronics.

Posted by Marcel Birgelen (Member # 6801) on 06-25-2019, 04:30 PM:

TI's DLP chips are produced mostly in Japan as are Sony's high-end SXRD chips.

Other high ticket items are optical elements like the prism, which is usually something you leave up to the Japanese or Germans. The "good" thing is that most likely, not all that much of the imager is coming from China.