Do the tarrifs apply for products or companies? Meaning the guitars are manufactured in Indonesia but will be sold by an American (?) company worldwide. I don't know if they'll be shipped at Jackson warehouses in the US or other countries or shipped direct to dealers from the factory on behalf of Jackson and how tarrifs will apply.
Edit: I'm mentioning this as the company I work for manufactures components all over the world and the US for the products we sell, final product is assembled in China, the headquarters have moved in a country with lower taxes and they've supposedly have taken the tariff into account as they don't want to raise the prices too much and affect the operation of factories. But it started as a US company.
When a part / material / product is imported into America, the company importing it has to pay a tariff on it.
The tariff is a % of the value at the time of import, not at the point of sale by the American company. If the American company imports a product (or parts / materials for the product) and then sells a product to the country that it was previously imported from (i.e. exports it back), the American company has already paid the tariff at the point of import and cannot claim it back.
It is essentially an additional tax that the US company has to either swallow or pass on to its customers (or a combination of the two).
For example:
Pre-tarrifs, Guitar Center imports a set of Gotoh locking tuners from Japan, paying a hypothetical $40 and then reselling them for a hypothetical $80. Guitar Center pays $0 tariffs and makes $40 profit (100% profit margin).
Post-tariffs, Guitar Center pays a 24% tariff on the $40 cost (i.e. $9.60) when importing the tuners from Japan, so now pays a total of $49.60 instead of $40. Gotoh receives the same $40 and pays $0 tariffs. If Guitar Centre still selss the tuners for $80, their profit is only $30.40 (61% profit margin).
If Guitar Center wants to make the same $40 profit per sale, they need to charge their American customer $89.60 instead of $80 (i.e. 12% more).
If Guitar Center wants to maintain the same 100% profit margin, they need to charge their American customer $99.20 instead of $80 (i.e. 24% more).
If Guitar Center moves its HQ to Japan, it still needs to import the tuners from Japan into America, which incurs the 24% tariff on the $40 tuner price in order to get them onto US soil...before it can sell them to a US customer.
If Guitar Center moves its HQ
and operations to Japan, the 24% tariff will apply to the $80 retail price that the customer pays, not to the $40 price that Guitar Center pays to Gotoh...meaning the American customer or supplier has to swallow a $19.20 tariff, not a $9.60 tariff.
The only way for Guitar Center to avoid the a tariff on tuners is to buy them from an American manufacturer - which is what Trump is hoping they will do.
In the first instance, American manufacturers would not be able to meet the demand nor match Gotoh's price.
If American manufacturers increase their production to meet the demand, they still won't be able to match Gotoh's price, due to US labour costs. Let's assume hypothetically that it would cost $50 to purchase a set of tuners from a US manufacturer (i.e. $0.40 more expensive than continuing to import Japanese tuners from Gotoh). We then need to factor in that the US manufacturer might not be a household name, so consumers might not want to buy it (resulting in a drop of sales if Guitar Center stocks the US tuners instead of the Gotoh tuners).
If Guitar Center tasks a US manufacturer with matching / beating Gotoh's price, the manufacturer can potentially only achieve that by lowering their quality (i.e. cheaper materials, cheaper tools, less experienced labour, reduced quality control measures etc.). Now Guitar Center is stocking a product that can be sold for the same profit margin (hurray!), but is inferior quality to Gotoh (boo!) and not a brand name that consumers want (boo!).
Now put all of this into the context of an established US brand whose profit margins and share prices are massively reliant on cheap Chinese labour and cheap Chinese parts & materials. The difference in labour costs (in many cases literally subsided by the use of Uighur forced labour currently) is too huge for it to be viable for a company to simply move manufacturing to US soil and keep prices + profit margins the same.
Apple and its shareholders must be fuming / crying right now.
It seems like a lose / lose situation all around, which is why almost everyone is at a complete loss as to how Trump (or his cult-like supporters) could possibly think this will benefit Americans.
Last time the US jacked up tariffs and started a trade war, The Great Depression quickly followed. Then, when the US started to reduce its tariffs, both the US and the global economies experienced an upturn. Not many people consider this to be a coincidence.
The speculative boom of the 1920s is largely attributed as the cause of the Wall Street Crash and a boom will always be followed by some degree of recession...it's just a matter of when and how severe.
However, the US and global economies were still on an upwards trajectory in early 1929, when the US started jacking up tariffs (in May 1929). Prices increased and sales decreased. The Wall Street Crash and The Great Depression soon followed.
Then the Smoot–Hawley Tariff Act (a Republican bill) was passed in 1930, against the advice of senior US economists, which resulted in the introduction of bigger and wider-ranging tariffs. Prices further increased and sales further decreased. The Great Depression significantly worsened.
Then the Democrats came into power and started to lower US tariffs. This was soon followed by an economic upturn and the end of The Graet Depression.
Can all (or any) of this be coincidental?
Let's not forget what followed The Great Depression...World War II. Massive US tariffs, global recession, governments blaming immigrants etc...the same warning signs are there.
