18 April 2025
By Michael Molenda, Editor
The impact of the Trump Administration's tariffs—whether they ultimately turn out to be a good thing for America or not—are having immediate effect. Perhaps not in pricing yet, as some of the tariffs have been paused, but certainly in corporate strategy, as businesses devise varied plans to manage revenue, manufacturing, inventory control, staffing, and other day-to-day concerns in the brave new world of global tariffs.
Obviously, goods from China are causing stratospheric worry as they touch almost every business.
In the music-product industry, for example, an electronic drum kit that costs around $325 to manufacture in China is looking at approximately $550 in tariffs, making the cost to the consumer more than double once conventional profit margins are calculated. The end result is that many music-industry manufacturers may need to cease Chinese manufacturing entirely—or significantly reduce their spend on goods from China—because many musicians will not be able to afford "made in China" instruments and technology.
And, by the way, much of the music-gear manufacturing will probably be shifted to "less tariffed" offshore factories (Indonesia, etc.), rather than brought back to America. The cost of building certain instruments in the United States remains prohibitive.
The drone industry, with its reliance on Chinese tech, products, and parts (batteries, etc.), is not going to be immune to tariffs. Duh.
Here are some ways that the tariffs imposed on China could affect the droning industry...
We're Gonna Pay More for Drones
DJI is the biggest consumer drone manufacturer in the world. Think about what it means if a DJI dealer is compelled to pay a 145-percent tariff on new models to replace or increase inventory. Yeah. Not good for the pocketbook. And that's just for DJI. Expand the tariff impact to include other Chinese drone manufacturers, as well as accessories made in China. Then, we may be looking at a Defcon 2 scenario for the industry—speaking in fictional, sci-fi flick terms—could mean a stalled marketplace, stunted growth, and bankrupted retailers and distributors.
Supply Chains Won't Be, Well, Supply Chains
China controls a significant amount of the components U.S. drone makers need to build their products. An ongoing trade war with the United States—meaning reciprocal tariffs and even an end (or pause) of exported motors, batteries, sensors, and other made-in-China materials essential to drone manufacturing—would be catastrophic.
Changes to Where Drone Products Are Built
As with the music-gear example, some manufacturers may need to get "out of China" in order to ensure they can continue to offer affordable products to consumers. But abandoning factories and an already trained workforce in China won't be an easy decision. Yes, there are potentially less-tariffed options in countries such as Vietnam, Indonesia, and Mexico, for instance, but building new manufacturing facilities in those areas—as well as training workers to produce brand-dedicated products with high quality—could take years. And will corporations take a leap of faith to relocate manufacturing when a policy change within the Trump administration could make it all for naught by easing China tariffs?
That Roof Inspection Is Gonna Cost More
The service providers who offer drone roof inspections, real-estate promotions, and other benefits may need to rethink their business plans to absorb increased hardware and software costs. Higher equipment costs = higher service prices. The uncertainty may also cause, say, a realtor to go, "Yeah, maybe it's not the time right now to hire someone to film drone tours of my home inventory."
International BVLOS Flights Get Kicked to the Curb
Geopolitical tensions are seldom good for international cooperation. As rulemaking for beyond-visual-line-of-sight flights are being considered by the FAA and International Civil Aviation Organization (ICAO), the China-USA trade war, as well as America's standing with its neighbors north and south, could have an impact on agreed-upon, international regulations for drones that can fly across borders.
Investment in the Drone Industry Crashes (Temporarily)
In another, not-so-long-ago time, the swift and massive growth of the drone industry seduced significant investment. Now? Perhaps not so much. Market uncertainty and volatility aren't exactly promoting feel-good moments for investors.
Hang On To Your Controllers
While the tariffs and trade wars can spell impending doom for the Chicken Littles of the world—and they obviously have good reason to scream that the sky is falling—business challenges can also open up business opportunities. Granted, it's probably a bad move to sit back and see how things play out. However, U.S. companies who have relied on technological innovation, need only embrace the potential shifts of a new normal, and transform their corporate strategies to flourish in a post-China business environment.
What are your thoughts?
Write us at mmolenda@thedroningcompany.com
