4.3.25 – SSI –
Security and commercial AV integrators, along with consultants and economic analysts, talk about how tariffs will affect them.
Editor’s Note: This exploration of tariffs and how they will affect integrators will be updated continuously as new information comes out. We last updated it on Saturday, April 5, at 3:40pm EDT.
Since the beginning of the year, the integration industry — and, indeed, much of the business world — has wrestled with growing uncertainty about the economic climate in the months ahead.
To be candid, many of the indicators haven’t been great lately. Earlier this year, equity markets suffered sharp declines, with the benchmark S&P 500 index initially falling about 10% from all-time highs and then eventually rebounding to low-single-digit losses.
(Immediately after the April 2 announcement of the president’s “reciprocal” tariffs plan, stock futures cratered. By the end of the April 4 trading day, U.S. equities had plummeted 10.5% (S&P 500) and 11.4% (Nasdaq) over just two days, calling to mind some of the worst trading days in U.S. history and bringing the Nasdaq to a bear market.)
According to a press release that The Conference Board Inc. released March 25, “The Expectations index — based on consumers’ short-term outlook for income, business and labor market conditions — dropped 9.6 points to 65.2, the lowest level in 12 years and well below the threshold of 80 that usually signals a recession ahead.”
Moreover, Goldman Sachs on March 30 increased its recession odds within the next 12 months to 35%, a number that closely tracked online betting markets like Polymarket, which had put 2025 recession odds around 39%.
(Subsequent to the April 2 reciprocal tariffs announcement, Polymarket recession chances spiked to 60%. Meanwhile, JPMorgan has now officially forecast a recession later this year.)
Going back to the March 30 note to Goldman Sachs clients, Jan Hatzius, their chief economist, wrote at the time, “The upgrade from our previous 20% estimate [of a recession] reflects our lower growth baseline, the sharp recent deterioration in household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies.”
The Goldman Sachs note indicated a higher Personal Consumption Expenditures (PCE) inflation estimate coupled with a reduced 2025 GDP forecast (1%).
Tariffs and Their Effect on Integrators
Clearly, then, tariffs are one of the biggest points of concern for our industry and for the broad economy. Tariffs are defined as additional levies charged to importers (whether manufacturers, distributors or otherwise) who source components or finished goods from specific countries subject to the tariffs. Contrary to a common misperception, it’s not the targeted countries that will pay these tariffs; it’s solely the American importers that will.
Here, we offer a primer of the tariffs initially proposed, temporarily paused, and then revised and expanded on April 2 during a much-anticipated White House announcement.
- Back in 2018, during the first Trump Administration, the White House imposed a wave of tariffs on China. These started with solar panels and washing machines, but, over the course of the year, the list expanded to include flatscreen TVs, medical devices, satellites, batteries and more. The Biden Administration subsequently kept about $300 billion of those China tariffs in place, even adding some of its own.
- The second Trump Administration added new tariffs on Chinese goods, starting on Feb. 4 with an additional 10% tariff on all Chinese goods imported to the U.S. (As of March 4, that additional tariff on Chinese imports doubled to 20%.) Moreover, the administration plans to scrap the “de minimus” exemption for low-dollar-value packages.
- At the outset of the new administration, the White House pledged to impose 25% tariffs on imported goods from Mexico and Canada. On February 3, the president “hit pause” for 30 days, offering a temporary reprieve for most imports from North American neighbors. By March 6, the president extended the postponement by another month for most Mexican imports and some Canadian imports.
- On Feb. 10, the Trump Administration announced plans to increase steel and aluminum tariffs, with steel imports subject to a minimum 25% tariff and imported aluminum subject to that same rate as of March 12. These tariffs affect all countries — not just those previously listed.
- On March 24, the president signaled his intention to impose an additional 25% tariff on imports originating from a country that buys Venezuelan oil or gas. If put into place, this policy would tack further tariffs onto China, which buys an outright majority of Venezuela’s oil exports.
- On April 2, Trump announced a new minimum tariff (10%) affecting all countries, with much higher rates for about 60 selected countries. According to a chart that the New York Times published, some of the new reciprocal tariff rates are as follows: China (34%), European Union (20%), Japan (24%), India (26%), South Korea (25%) and Taiwan (32%). Currently, the U.S. has a trade deficit with many of the targeted countries.
Global Supply Chains, Tariffs and Integrators
Given the global nature of supply chains these days, tariffs have stoked anxiety among manufacturers, distributors and integrators in the commercial AV and electronic security industries. During ISE 2025 earlier this year, vendor executives alluded to all-hands meetings taking place to figure out how to respond if the threatened tariffs actually went into effect. Those conversations have likely only grown more pervasive as the White House has announced additional levies.
For this story, CI+SSI reached out to several of commercial AV’s most prominent vendors. (All vendor interviews — indeed, all interviews — took place before the April 2 reciprocal tariffs announcement.) We asked if they’d be willing to go on the record about how they plan to respond to tariff policy. Understandably, many declined to speak to me about this sensitive subject, citing either lingering uncertainty or company privacy. However, two vendors — Crestron and NETGEAR — did agree to be quoted for this story.
Crestron on the Record
John Clancy, chief sales officer, Crestron, says, “The current U.S. tariff on Chinese imports, including key components in our product lines, stands at 20%. While this does have a direct impact on our landed costs, we have strategically absorbed the majority of this burden to minimize disruption to our customers and maintain market competitiveness.”
He says that, comparatively, tariffs on goods produced in Mexico and Canada pose “…greater challenges due to supply-chain dependencies and cost structures.” Of course, the North American tariff impact remains the most uncertain as President Trump continues to speak behind closed doors with Prime Minister Mark Carney and President Sheinbaum.
According to Clancy, “It is our intent to pass these costs along to our dealer/integration partners as a tariff surcharge — not a price increase — and should the full range of tariffs kick in, that surcharge will be 12%.” The virtue of adding a surcharge to an invoice, he says, is transparency about the source of cost increases; this likewise enables dealer partners to converse with their customers and adjust pricing accordingly.
“We believe this approach also simplifies our ability to adjust surcharges as tariffs are reduced or removed,” Clancy says. “Things are fluid right now, and we intend to stay nimble, proactive and transparent.”
Clancy notes that Crestron is “implementing a structured communication plan and has already provided notice of these tariff-related adjustments before they take effect.” He continues, “Our approach includes direct email communications, regular updates through our partner portal and dedicated account management touchpoints to keep stakeholders apprised of our ongoing strategy.”
As noted, the additional China tariffs were first to come into effect, and Crestron is currently absorbing the tariff costs to minimize disruption to partners and end customers. “However,” Clancy says, “should circumstances evolve, we have built flexibility into our plan, allowing us to reassess and adjust our strategy as needed.”
NETGEAR on the Record
Richard Jonker, vice president marketing and business development, NETGEAR, emphasizes the component-by-component effect that tariffs will likely have on the company’s products. “Only when products are entirely sourced and produced in a country with a tariff will the cost price increase by that same percentage,” he says. “At NETGEAR, we recalculate the price of a total bill of materials, often with more than 400 components, based on price variations for each part.” Jonker says that, since NETGEAR diversified its supply chain, it will be able to limit the impact regardless of which tariffs take effect.
Nevertheless, Jonker does expect our industry to see significantly higher prices due to the conflicting imperatives to pay tariffs and to maintain margin percentages. He offers the following example:
You buy parts and labor for a product for a total of $100 and sell that for $200; then, your margin percentage is calculated as [sales price – buying price] / [sales price]. In this example, the margin is $100, and the margin percentage is 50%. Now, if this were completely sourced with materials affected by a tariff, and the total buying price increased by a 25% tariff, the buying price shoots up to $125. If you want to preserve your $100 margin, your products should now sell for $225. But that is a 44% margin percentage, not the 50% it used to be. So, instead, companies would set the new selling price at $250 to achieve the margin percentage of 50%. So, a buying price increase of $25 would turn into a selling price increase of $50.
“That is why the impact of a tariff is more than a ripple effect,” Jonker says.
He adds that suppliers like NETGEAR are seeking U.S. stateside options where they exist, as well as opportunities to leverage offshore operations in tariff-exempt countries. “We are constantly second- or triple-sourcing,” Jonker declares. “By diversifying this as much as possible, we maintain a stable supply pipeline.”
An Economist’s View of Tariffs and Integrators
Peter Hansen, economist at AVIXA, reinforces the notion that unpredictability, perhaps more than anything else, is our biggest worry. “Right now, the primary negative is uncertainty,” he explains. “There are some very uncertain aspects, or some cliffs, that are affecting different companies unequally.”
That uncertainty involves not only which tariffs will be imposed (or postponed) and when, but also how tariffs might “stack” atop one another. “These are all additive,” Hansen says.
Think of Chinese goods, for example. Suppose a package that formerly enjoyed a “de minimus” exemption is now subject to the original Trump Administration tariffs on China, plus the newly announced tariffs, plus more tariffs on steel and aluminum (or on countries that buy Venezuelan oil or gas). “Now, you’re talking about a ridiculous price increase,” Hansen says.
To be clear, this is not the base case, Hansen hastens to add. However, it does speak to the level of uncertainty and potential for change. “Maybe it’s a 10% tariff,” he says. “But it could be [cumulatively] 25%, 50%…it could be a really, really huge change.”
Because even the possibility of “really huge change” can produce constrained investment and a defensive crouch, Hansen’s economic view aligns with the backdrop we painted at the outset. “Whatever metric you look at, you see a meaningful increase in recession odds in 2025 as compared to the start of the year,” he opines.
Equity markets are just one example. “That negativity in the stock market is one of the real-time indicators that the level of positivity has declined so far in 2025,” he says.
Another area where Hansen sees some negativity is in initial starts of construction projects and renovations. However, both the commercial AV industry and the electronic security industry tend to be far downstream of those starts, meaning the initial impact for us might be muted.
Ultimately, even if a downturn materializes, Hansen does not expect it to be deep and long-lasting. Instead, he evokes the image of a sine wave or a sideways “S.”
As he explains it, “You end up with projects being postponed in the most uncertain window, and then finally happening once the chips fall.” Hansen continues, “That said, to the extent tariffs increase the cost of doing business, the post-uncertainty rebound might not be as strong as the uncertainty-caused short-term drop.”
Tariff Insights: Boutique Design-Build Integrators
Among the integrators we spoke to, anxiety levels varied, but all clearly had tariffs on their mind.
One of the more concerned voices was that of Matt Lavine, owner of Bug ID, a design-build integrator based in Richmond, Calif. During our mid-March interview, he cited an email he received from a huge company in our industry.
“[It] basically said there’s a new price list coming out April 1. And I have registered pricing for some projects that are guaranteed ’til August. And they are not going to honor that. But they’re also not telling me what the new price is.” His frustration palpable, he asks rhetorically, “How do you run a business that way? How do you deal with that?”
Compounding the challenge for Lavine, very few of his suppliers, in his estimation, have been proactive in their communication. Citing an exception, he says, “We’ve got one vendor in Canada who is being proactive and who said, ‘Look, if the tariffs kick in, there’s going to be a 10% price increase across the board.”
But Lavine also recognizes that tariff policy, particularly as regards North America, remains deeply uncertain. “We just don’t know what price we’re really going to be working with — and they don’t, either,” he laments. “So, it’s been a challenge.”
That means the next few months might be tough for a design-build integrator like Bug ID. Given the time gap between quoting the job and proposal sign off, Lavine expects that Bug ID will have to absorb higher costs for roughly three to four months. “No matter what clauses you have in place, like ‘Prices are good for 30 days,’ a Fortune 500 company really doesn’t care,” he says. “You end up following their terms.”
Lavine continues, “We’re going to be absorbing it because it’s going to be really hard to pass that on [after quoting the project]. So, we’re going to take a financial hit for months.” Long term, Lavine plans to determine raw product-acquisition cost, add Bug ID’s margin and charge clients accordingly.
According to Lavine, Bug ID, being a small, boutique integrator, has nimbleness in its favor and, historically, has done well during economic downturns. And he’s not seeing weakness yet in terms of project pipeline; indeed, the company is booked through September. But Lavine is candid in his intermediate-term assessment, saying, “I do think 2026 is going to be a lot harder.” He adds, “I think our projects are going to get smaller and not as plentiful.”
Tariff Insights: Security and Commercial AV Integrators
John Loud, president of LOUD Security Systems, Inc., describes his vendors as “outstanding” in their communication — even if they don’t have all the answers themselves.
“They’re internally trying to figure out how they’re going to navigate it,” he says, characterizing recent calls and dialogues during industry events. “Which is really a frustration point…because everybody’s putting a lot of time, energy and resources [into] trying to figure this out.”
According to Loud, some suppliers have indicated their intent to increase prices beyond the tariff percentages to minimize unforeseen risk. He says, “Some have said they’re going to pass all of it on, as well as some more. So, in other words, if they’re going to get a 25% hit, they may be going up another six, eight or 10 points.”
It’s easy to see, then, why some economists are concerned about tariff policy inducing a new wave of inflation — an eventuality that could keep interest rates high.
Potential inflation was top of mind for Loud when his team and he chose to preemptively buy several hundred thousand dollars of product in cash, building up valuable inventory.
“The pricing structure for your products and materials are as low today as they’re pretty much ever going to be for years ahead,” he predicts. “When [prices] go up to 15%, 25% or 35%, that 35% increase is not going to go back to zero…. Just set proper expectations today that it’s not going back to zero.”
LOUD Security Systems’ decision reflects not only a willingness to leverage its advantageous cash position but also a commitment to its workforce, which he describes as his most precious commodity.
“If you don’t have that product available to be able to sell, your technicians aren’t going to be working [and] your salespeople aren’t going to be working,” he states.
That sense of stewardship for associates also means Loud is clear-eyed about having to raise prices for his own clients in response to higher product-acquisition costs.
“We’re going to stay within a comfort level of what it costs for us — between all of our marketing, all of our salaries — to be able to invest and obtain new subscribers and retain them in the long run,” he declares.
As you might expect, tariffs were a hot topic among security and commercial AV integrators at PSA TEC in Denver last month.
“The biggest fear I have is the uncertainty of tariffs puts the integrator in the middle,” says Travis Deatherage, partner and president at Linx Multimedia. “Everyone learned how to deal with costs that are out of our control, but customers have short memories.”
“The tariffs are treated a bit like the (COVID-19) pandemic,” says Dawna Payne, executive vice president at Texadia Systems. “You really have to be proactive about it. You can’t just leave it out there and wonder, ‘When is the customer going to have anxiety?’”
Tech Systems, Inc. (TSi). has been including language in its contracts related to potential tariff-related impacts, says chief technology officer Shawn Ruddo, a practice that others have also adopted.
“We’re super-communicative with our customers,” says Gary Hoffner, vice president of PSLA Security. “They’re in the same boat.”
Consultant’s View: Consumer and IoT Technologies
Avi Rosenthal, managing partner at BlueConnect Partners, a consultancy specializing in consumer and IoT technologies, predicts the possibility of a continuing manufacturing exodus from China in response to escalating (and stacked) tariffs.
“[Ever since] China became not the best place to build products, we’ve been advising our clients to migrate from China to other manufacturing facilities,” he says. “About five or six years ago, we had 23 contract manufacturers within mainland China; we’re now down to one.”
That manufacturing is now distributed among countries like Taiwan, Malaysia, Thailand, Japan, Vietnam, Mexico and South American nations like Colombia. This also reflects a hard-won lesson from the pandemic years: Don’t put all your eggs in one supply chain basket.
Rosenthal identifies a stressor for manufacturers that others haven’t commented on yet: uncertainty as regards whether a given shipment will be tariffed — and, if so, by how much. Indeed, he says, in some cases, importers don’t find out until the container actually reaches our border.
“The good news/bad news here is, there’s no appeals process,” Rosenthal states. “So, if you receive a shipment that’s been under-tariffed, there’s no way to go back and say, ‘There’s a mistake.’ The same way, if there’s a shipment that’s been over-tariffed, it’s very difficult to go back and try to recoup that money.”
What that means for importers, Rosenthal says, is they may receive one shipment of goods for one price and then, for the very next shipment, be charged a different price, even though the rules haven’t necessarily changed. “So, it can be very difficult for them to set pricing to the dealer,” he adds.
Rosenthal also opines that, although tariffs are predicated on the idea of boosting domestic U.S. manufacturing, the fact that product “inputs” (e.g., aluminum, steel, raw materials) are not exempted from planned tariffs means it will be difficult even for U.S.-based manufacturers to seize on this policy change to bolster their own success.
After all, there might be no option to buy certain product “inputs” domestically. More broadly, he sees signs that some domestic producers are now raising their own prices to meet the enhanced costs of products imported from abroad. “They have no incentive whatsoever to lower their costs,” he declares, citing a more expensive competitive landscape.
Against that inflationary backdrop, Rosenthal offers a word of advice to integrators and dealers: “Make sure that your contracts to your customers have the ability to be altered.” The sales cycle for an integration project can last six months to a year, he notes, but equipment acquisition might not take place until a couple of weeks before the installation commences.
“So, it’s important to put clauses into your contract that allow you to change the prices based on manufacturer changes,” Rosenthal underlines. Although Lavine earlier questioned the viability of this strategy, saying Fortune 500 companies and other powerful clients would balk, the downside risk of leaving yourself exposed is simply too great. “It’s important to protect yourself as an integrator,” Rosenthal adds.
Consultant’s View: Posturing vs. Reality
Mitch Reitman, principal of Reitman Consulting Group, Inc., doesn’t necessarily disagree with any of the advice put forth so far, but his concern about tariff-related challenges is mitigated by his belief that much of what we’re seeing is posturing in a public negotiation.
“We’re watching a negotiation that we don’t understand, and we don’t really have the facts on,” he says. “And we’re hearing little bits and pieces and sound bites out of the negotiating process.”
Another consultant, Paul Boucherle, founder/principal of Matterhorn Consulting, LLC, expresses a similar view, saying, “I believe tariff policy is an economic negotiating tool to level trade playing fields.” He adds, “The U.S. is in a strong negotiating position due to our market size.”
In line with this view of things, Reitman says that, at least as regards Canada and Mexico, he thinks prevailing tariff anxiety may be much ado about nothing. “I’m not as worried about this as other people seem to be,” he comments. “I don’t think it’s going to cause a major shift, other than the fact that some people may rethink where some of their stuff is coming from.”
That said, Reitman does readily concede one point: “The tariffs are going to hit the Chinese goods really hard.” And he agrees with Rosenthal that we may increasingly see components, raw materials and product “inputs” imported from South America, Central America or alternative countries in Asia.
But he doesn’t share the same concern about tariffs contributing to conditions that could perhaps induce a recession. “We should focus not so much on the details here but look at the big picture,” he declares. “Our economy is healthy.”
Reitman describes some of the policy-driven reining in of growth that we’re now seeing as a “correction” to overexuberant equity markets and pandemic-era global inflation.
“Anytime you have a tax — which a tariff basically is a tax — and money comes out of the economy and into the government, for any reason, it’s going to slow down growth and slow down the economy a little bit,” he acknowledges. “We’re stepping back from five years of unbridled inflation, and that is going to cause the economy to shrink a little bit. But it may shrink for the best.”
He offers advice to the security channel that Reitman Consulting Group serves, saying, “I wouldn’t say to go out and buy everything you see because you think prices are going to skyrocket. Be rational, watch what’s going on, listen to your vendors and see what’s happening.”
And even if a recession does materialize — an outcome that he doubts tariffs will produce — Reitman emphasizes the resiliency of the electronic security industry. “When the economy is doing well, people want to protect what they have; when the economy is not doing well, people want to protect what they have,” he quips.
Final Thoughts on Tariffs and Integrators
Barring a dramatic and unforeseen change in administration policy, tariffs will continue to shape the economic conversation for months to come. The odds seem good that, in the coming months, we may see more tariff impositions, pauses, exemptions, revocations of exemptions, expansions and revisions. And temporary measures like stocking up will only get integrators so far — while also perhaps straining their working capital, tying up their line of credit and filling warehouse space.
“At best, you’re getting several months of supply, and that’s excellent,” AVIXA’s Hansen says. “But that goes away, and then you have three-and-a-half more years of [pro-tariff policy].” Hence, it’s essential to devise a sustainable long-term strategy.
The word of the day, it seems, will continue to be “uncertainty.” Integrators in both the commercial AV and the electronic security industries should buckle in and follow tariffs developments closely to protect their project profitability and cash flow.