The AV industry is once again navigating a shifting landscape of international trade policy. The Feb. 20 decision by the U.S. Supreme Court struck down the “Liberation Day” tariffs, a move that initially seemed to promise relief for manufacturers and integrators. However, the situation has quickly become complicated by the subsequent announcement of a new 15% blanket tariff. This sequence of events has left many stakeholders questioning the true net effect on their bottom line and business operations.
In the previous installment of our “Tariffs Perspective” series, Brad Hintze, executive vice president of marketing at Crestron, highlighted the uncertainty and the challenge of maintaining dealer trust amid fluctuating costs.
In the next installment, Commercial Integrator sits down with Sean Wargo, co-founder of Apogee Insight LLC, who offers a data-driven perspective on the complex tariff equation. He also provides insights into how manufacturers might react, the potential impact on product costs and the broader allocation of company resources in this unpredictable environment.
A Moment to Take Stock
The back-to-back tariff announcements create a complex picture. While the Supreme Court’s ruling appeared to be a significant win for importers of electronic goods, the new 15% tariff — set for 150 days but potentially renewable — mutes the celebration.
According to Wargo, the net effect is still a slight improvement for the pro AV industry compared to the previous situation. “The impact of all the tariffs combined was probably a 25 to 30% hit,” he explains. “When you remove the emergency powers one and subsequently add back the blanket 15%, you’re still in a net improved situation for pro AV on paper.”
This reduction, perhaps around 10 percentage points, could theoretically translate to a better cost of goods for buyers. However, Wargo cautions against expecting immediate, widespread price drops. He notes that the reality is far more nuanced, depending on each manufacturer’s individual strategy.
“Some manufacturers decide to pass through price increase immediately [while] some go ahead [and] look at other ways [for] absorbing the cost,” says Wargo. Those that absorbed the previous, higher tariffs are now in a better cost position. For those that implemented price increases or surcharges, the pressure may now be on to reduce them.
Wargo suggests this is a moment for businesses to pause and re-evaluate rather than make rash decisions. “For now, it does seem like a breather moment where it looks like costs will be less, barring hits from logistical supply-chain disruptions in the Middle East and energy price points,” he says. “I think it’s looking like an improvement of situation from where we were less than a year ago.”
Sean Wargo on the Complexity of Net Impact of Tariff Situation
A recurring theme in Wargo’s analysis is how challenging it is to pinpoint the precise impact of tariffs on the industry. The wide range of products, models, and market dynamics means the cost burden and the potential workarounds vary widely by company and use case.
“Calculating the net impact of tariffs to our marketplace is almost impossible because there’s so many moving levers,” he explains. “The customer can choose so many different ways to avoid that increased cost,” He highlights a variety of strategies available to both manufacturers and customers, such as product substitutions, changes in component sourcing, and shifting between brands and technology types.
Wargo also notes that tracking project scopes and costs has become increasingly complex, raising questions about whether more projects are limited in scope or larger in scale, and how integrators and manufacturers are adapting by switching components. “Looking at platform data (such as Jetbuilt, D-Tools or XTEN-AV) is going to be really helpful to see how customers [are] making their decisions around swapping brands, technologies [or] models, down-speccing, etc.,” he states.
Ultimately, Wargo’s perspective underscores the numerous variables that make it nearly impossible to assign a straightforward net cost to tariffs for the pro AV and custom integration sectors. “It will be interesting to see how the market adapts to the changing situation,” he notes. “But my working theory is the law of substitutions dictate that customers are going to make lots of different choices.”
The Resource Diversion Dilemma
Wargo proclaims that another major consequence of this prolonged tariff uncertainty is the diversion of internal resources. He shares an anecdote from a conversation with an industry executive that illustrates this point. According to Wargo, the executive lamented that valuable company brainpower is being spent on navigating supply-chain complexities instead of on core business drivers like product innovation. He states that this shift in focus is a defensive maneuver.
While optimizing logistics to mitigate tariff costs can protect profitability, it is not a sustainable long-term growth strategy. Wargo thus opines that true growth comes from creating better products, developing new use cases and responding to market-driven needs like the integration of AI. “It’s resource allocation,” he remarks.
This constant need to react to geopolitical and trade policy shifts detracts from the forward-looking work that truly advances the industry and provides value to the end customer. As Wargo puts it, figuring out how to save money as a product moves around the world is “too easy to disrupt” by wars, new tariffs or natural disasters, whereas innovation is “a bit more market-driven [and] sustainable.”
A Small Sigh of Relief for the AV Industry?
As Wargo observed earlier, the initial panic has subsided, replaced by a more resolved acceptance of the new normal within the AV industry. “My read coming out of ISE 2026 is: ‘Yes, we’re paying attention [and] we’re dedicating resources to it,’” he says. “We’re kind of resolved to the situation and we understand that it’s an increased cost. We’ve made adjustments in our structures to help us recap some of that.”
Wargo believes the industry may experience a “small sigh of relief” as worst-case scenarios that many feared have been mitigated slightly. The key thing to watch for now, he suggests, is whether this slight cost improvement will trigger a short-term increase in shipments as distributors look to “take it while you can get it.”
Final Thoughts by Sean Wargo
In summation, the situation remains fluid, but the extreme consternation of early 2025 appears to have lessened. The focus is now on adaptation and strategic navigation rather than crisis management. Wargo concludes that while it is important to monitor these inflection points, the industry’s pulse is trending away from panic and shifting toward a pragmatic — if weary — resilience.
