Summary
Crazy tariff policy is back, and wilder than ever. While we don’t have insane things like 200% tariffs on Chinese products anymore, tariffs for many countries go up to 50%, which is still a lot. Sonos is just the latest company to announce its hand is being forced on a price hike.
Sonos has announced that it will be raising the prices of some of its products later this year. The company is making it pretty clear-cut that the hikes are coming because tariffs have left it with no choice. Sonos devices are primarily manufactured in Vietnam and Malaysia, and tariffs, which stand at 20% for products from Vietnam and 19% for those from Malaysia, have already had a significant impact on Sonos’s finances.
Since the announcement was made during the company’s third-quarter fiscal earnings presentation, it allowed itself to back this up with numbers—the company reported that tariffs have, so far, cost it $2.1 million. This figure is projected to more than double to $5 million in the fourth fiscal quarter. The company noted that the fourth-quarter estimate is based on a prior 10% tariff rate on in-transit inventory, suggesting that the impact on future quarters could be even greater.
In response to these rising costs, Sonos is taking a two-pronged approach. The most immediate and noticeable change for consumers, right now, will be price increases across its product portfolio. The company has not yet specified which products will be affected or by how much, but if previous tariff-fueled price hikes from other companies are anything to go by, price hikes could be anywhere between 20% to 30%, or even more—OnePlusrecently attempted a 50% hikeon its most recent smartwatch. I’m not sure it will be this steep, but if you have anything from Sonos in your shopping cart, you might as well get to that checkout screen now.
The second part of Sonos’s strategy involves a long-term plan to diversify its geographic footprint. It will look to further expand its manufacturing and supply chain to other regions, and by doing this, the company hopes to mitigate the impact of tariffs and other geopolitical and economic risks in the future. This move follows a previous shift in which Sonos moved the majority of its manufacturing for US-bound products out of China to Vietnam and Malaysia. Currently, only a limited number of accessories, such as speaker stands, are still made in China for the US market. This move will see the company diversify its manufacturing even more, though we don’t know where it will go from here.
The important news here is that price hikes are imminent, so go ahead and buy that speaker you’ve been looking at for weeks.
