In our previous “Tariffs Perspective” article, analyst Sean Wargo described the current tariff situation as a potential “breather moment” and a slight net improvement for the integration industry on paper. However, some integrators expressed different sentiments. In this article, Matt Lavine, owner of Bug ID, a design build firm, shares his perspective on how the constant flux creates chaos, erodes profit margins and forces AV businesses to focus more on contractual protections instead of their core mission.
Matt Lavine on Chaos, Confusion and Eroding Margins
While the Supreme Court ruling may have seemed like a victory for some, Lavine sees it as the start of a new chapter of complexity followed by the question of what to do with the nearly $200 billion in tariffs already collected. “How do you refund that money?” he asks. “I am concerned…that things might get reversed again because of the complexity.” He also expresses his concerns that the current administration will just keep adding more section 122 tariffs.
Lavine notes that any refunds are unlikely to reach the end consumer or even the integration firms that absorbed the initial price hikes. “It is easy to refund the money to the companies that paid [the tax] because they have a paper trail,” explains Lavine. “But I don’t think that does anything for industry or our global economy in general because…in the AV world, we don’t have a direct correlation.”
This ongoing unpredictability injects what Lavine calls “more confusion and chaos” into the market. He draws a parallel to the situation a year ago, noting, “I haven’t seen any manufacturers give us any notifications yet saying they are or are not going to increase prices.”
Lavine then points to conversations with peers at the recent BLC event, where a common theme emerged: margin erosion. “Our profit margins were not as strong as they were in years past in relation to the revenue,” he shares. “And that is because of tariffs and overall global inflation.” This margin erosion, reveals Lavine, is a direct result of price volatility between the time a project is quoted and when the equipment is ordered, a gap often absorbed by integrators.
The New Normal: Permanent Hikes and Pivots
Another key question for integrators is whether these tariff-related surcharges will ever disappear. Lavine, however, remains skeptical, comparing them to the fuel surcharges that have become a permanent fixture on shipping invoices. “I think prices are going to remain elevated [and] I don’t see them going down,” he states. While some manufacturers use a separate line item for tariff surcharges to maintain transparency, Lavine believes that even if tariffs are removed, the higher prices are likely here to stay, absorbed into the overall cost of goods to offset other inflationary pressures.
According to Lavine, the instability has also forced integrators to become more agile and adaptable in their product selection. He notes that the supply-chain disruptions over the last few years have taught valuable lessons. “When you talk about the supply chain, we had to pivot,” he recalls. “We pivoted, found other products [and] we haven’t gone back.” This has led to a shift in market share, with some lesser-known manufacturers gaining relevance.
For Lavine’s own business, the response to tariff threats isn’t to stockpile inventory but to remain flexible. “If I can’t get that [particular] product, I’m going to buy something else,” he says. For Lavine, this malleability is becoming a crucial survival skill.
The Path Forward
Perhaps the most telling development is the lack of communication from suppliers since the latest tariff announcements. Two weeks after the Supreme Court ruling, the industry response has been muted. “It’s been radio silent,” Lavine confirms. “And I think because everyone knows it’s chaotic and they don’t really know how it is going to affect them.”
This information vacuum makes it difficult for integrators to plan and forces them to protect themselves through other means. The focus then shifts to tightening contracts and shortening price-lock windows. “We need to be a little more aggressive on our approach to business and contracts to make sure we are protected,” Lavine admits.
Final Thoughts by Matt Lavine
Ultimately, Lavine stresses that navigating this chaos means coming down to the fundamentals. “Keeping relationships with your vendors and manufacturers in that open dialogue is really key… because that will help stabilize your business,” he says. Lavine thus argues that even if a project is less profitable, delivering a quality product and preserving the long-term client relationship is paramount to ensuring business success amid the present uncertainty in the integration industry.
