Tariffs are taxes or duties placed on imported goods, and recently, they’ve been making waves in the news and in the heavy equipment industry. These changes have been significant, affecting both dealers and consumers. As prices for raw materials and imported machinery rise due to tariffs, the effects are felt throughout the entire supply chain.
Let’s break down how these tariffs will impact dealers, how they might influence your buying decisions, and what companies like SANY are doing to soften the blow.
The Effects of Tariffs on Dealers
Dealers are the front-line workers when it comes to pricing and distributing equipment. When tariffs raise the cost of importing machinery and materials, dealers face a challenge: how to keep their prices competitive while still making a profit.
For example, when the cost of goods increases due to tariffs, dealers are forced to either absorb the cost or pass it on to the consumer. However, in an industry as competitive as heavy equipment sales, passing on the full cost might risk losing customers. So, dealers must figure out how to balance pricing to protect their margins without losing their customer base.
While dealers do buy based on tariffs, they also work with manufacturers and suppliers to negotiate costs where possible.
The Impact on Consumers
Consumers inevitably feel the effects as tariffs raise the cost of importing equipment. The rising costs could affect your budget, whether you’re looking to buy or rent equipment. Dealers, faced with higher costs, may have to raise prices or offer fewer financing options.
This means that businesses looking to purchase or lease equipment may have to adjust their expectations. Higher initial purchase costs could make some buyers rethink their decisions, opting for older models or considering rental options instead. Increased equipment prices could also affect the leasing and rental markets, leading to higher rates across the board.
Offsetting the Cost of Tariffs
Tariffs introduced challenges across the heavy equipment industry, impacting pricing and availability. While SANY is doing its part by working directly with dealers to help offset some of the cost increases, it’s important to recognize that tariffs affect the entire industry, not just one manufacturer. We simply have a great relationship with SANY so we can work directly with them on addressing these concerns.
Nearly every brand in the heavy equipment market faces similar issues due to imported components or whole machines from outside the U.S.
SANY is working with dealers to maintain price stability and minimize fluctuations caused by tariffs. By offering support and guidance, they help dealers navigate these challenges without passing excessive costs onto the consumer. However, it’s important to remember that while these efforts help ease the burden, costs will still rise due to the global nature of the industry and the products being imported.
The reality is that imports (whether it’s the machines themselves or key components) are an integral part of the heavy equipment market. This isn’t just a SANY issue; it’s a broader industry trend. Understanding how much of our economy is tied to imports and how that plays into the equipment world will help you better grasp the impact tariffs have on pricing, regardless of the manufacturer.
Will Buying Used Be Cheaper?
The answer is yes, buying used equipment will generally be cheaper than purchasing new. This has always been the case. However, the current economic environment and rising tariffs could drive up demand for used equipment as buyers look for more cost-effective solutions.
While used equipment might seem like the more affordable option upfront, increased demand could lead to higher prices in the used market as well. We saw this in the vehicle market in 2022—demand went up, and supply went down.
Like new equipment, sellers and dealers might raise prices to take advantage of this trend, meaning buyers will likely feel the price increase, even if they’re opting for used gear. The decision doesn’t just stop at the price tag, though. Another important factor to consider is how much it will cost to replace the equipment later.
For businesses, the resale value of used equipment plays an important role in determining long-term costs. It’s important to think about how easily the equipment can be sold when the time comes to upgrade or expand. If the market for used equipment remains high, you could recover more of your investment when selling or trading in your equipment. But if demand drops or the market shifts, you may face challenges in reselling it for a fair price.
Renting can sometimes provide a middle ground if you’re unsure about long-term ownership. It allows you to avoid the balancing act of resale value and replacement costs while still having access to the necessary equipment. However, as you add to your fleet and your projects become more consistent, buying could be a better option for long-term savings.
In short, while buying used equipment will typically be more affordable than new, market demand will play a significant role in determining how cheap it really is in the near future. It’s important to consider how much you’ll get back when selling, as well as the ongoing cost of replacing the unit or renting if needed.
Navigating the Impact of Tariffs
The impact of tariffs on the heavy equipment industry is undeniable, but it’s important to understand that this ripple effect extends well beyond the equipment dealer. As tariffs raise the cost of doing business, your cost of goods sold increases, and ultimately, this cost increase is passed down to you, the customer. It’s not just about us—it’s the whole supply chain getting squeezed.
While dealers and OEMs are doing their part to offset some of the costs and maintain stability in pricing, the reality is that tariffs impact nearly all industries, not just heavy equipment. Manufacturers are paying more for parts, and costs go up across the board, from steel to transport. This means prices for equipment and parts are increasing.
As a consumer, understanding the broader picture of tariffs is key. What is being affected? Tariffs generally target imports, whether it’s the machines themselves or key components like hydraulics, engines, and electronics. In fact, a significant portion of the equipment industry relies on these imports, with the U.S. GDP seeing a noticeable effect from global trade disruptions.
The Bigger Picture: How Businesses Are Responding
The chain of impact runs through multiple sectors, but businesses that work with imported equipment are particularly vulnerable. Small businesses in the equipment sector are finding ways to mitigate these impacts, such as streamlining operations, focusing on local sourcing, or adjusting project timelines to accommodate increased costs.
This isn’t the first time we’ve seen this, and while the current tariffs may be more extreme, we’ve made it through similar situations before. Last time we saw some shifts in pricing and demand, businesses adjusted. Some absorbed costs, while others passed along a portion of the price increase to customers. This time, the goal is to work closely with our customers to ensure they understand the changes coming down the pipeline and help them adjust their pricing accordingly.
Helping You Adapt
The more clarity we can provide during times like this, the better equipped everyone will be to make the right decisions. While tariffs may cause some short-term pain and panic, it’s important to know that this isn’t the end of the road. It’s a temporary adjustment period.
At the end of the day, our goal is to be transparent and help you make the most informed decisions possible. Whether you're looking to rent equipment for a specific project or buy new machinery for the long-term, we’re here to walk you through it. Let’s talk about the impacts tariffs are having and work together to ensure that, despite the challenges, your business continues to thrive.
