February 2025 – Tariffs in the Used Equipment World

In recent weeks, the topic of tariffs has once again taken center stage in North American economic and political
conversations. On one side of the border, the Canadian government is preparing a retaliatory response if the United States
imposes sweeping tariffs on Canadian goods—while on the other side, newly elected U.S. leadership is signaling a strong
stance on trade deficits and foreign imports. The back-and-forth has left many businesses, especially manufacturers,
wondering how it will all play out.

While tariffs are often framed as a way to protect domestic industries and encourage local production, they can also lead to
higher costs, strained relationships with trade partners, and an impact on everything from supply chains to used equipment
markets. Below, we’ll explore how tariffs might serve as a protective barrier for American manufacturers, the potential
downsides economists warn about, and why the used machinery market could see notable changes.

Tariffs as a Protective Barrier
Tariffs are typically put in place to shield domestic industries from foreign competition by making imports more expensive. In
theory, this encourages companies to source materials at home. For American manufacturers, it can mean less foreign
competition and a boost in local hiring. Supporters say tariffs help communities by creating new jobs and spurring
investment.

A prime example of domestic manufacturing gaining momentum is the new Anduril Industries facility in Pickaway County,
Ohio, named “Arsenal-1.” This 5-million-square-foot operation will produce advanced defense technology, promising over
4,000 direct jobs and adding nearly $1 billion to Ohio’s gross domestic product. Construction is set to start after approvals,
with production beginning by July 2026. This massive project shows how tariffs—or even the threat of them—can prompt
companies to grow in the U.S., avoiding cross-border taxes. As defense production ramps up, states like Ohio could become
big winners in a more protectionist landscape.

The Downsides and What Economists Predict
However, tariffs also have drawbacks. Many economists warn they can trigger retaliatory measures—just as Canada has
hinted—which can drive up prices for consumers and businesses, squeeze profit margins, and slow economic growth. Tariffs
on critical inputs like metals and machinery raise production costs, and if a full-scale trade war unfolds, exporters could face
steep duties abroad, hurting U.S. competitiveness in global markets.

A Benefit for Used Equipment Dealers?
One of the lesser-discussed impacts of tariffs on Canadian (and possibly other foreign) imports is what it could mean for
used machinery dealers. New CNC machines, for instance, are largely manufactured outside the U.S. If import tariffs spike,
domestic manufacturers may pause and consider buying used equipment already located in the United States rather than
shouldering a 25% (or higher) markup on a new foreign-built machine. Same goes for electric motors and transformers which
are largely manufactured or use parts/material from Asia, Mexico, Brazil, & Europe.
Buying used can significantly cut costs compared to purchasing new, especially if tariffs inflate prices. If a new foreign CNC
faces a hefty surcharge, the price gap between brand-new and used equipment grows even wider. The result might be an
uptick in demand for used machinery, allowing companies to maintain or expand their production capacity without breaking
the bank on tariffed imports.
Not every manufacturer will settle for used equipment—some require the latest technology. But in many cases, a reliable
used machine can be upgraded or retrofitted, offering a cost-effective alternative. This shift could bolster U.S. used
machinery dealers’ sales and open opportunities for businesses looking to sell surplus machinery at attractive prices.

In the end, whether tariffs help or hurt the broader economy depends on a variety of factors: how other nations respond,
how companies adapt, and how long such measures remain in place. What does seem clear is that U.S. manufacturers will
need to watch the used machinery market closely. With new machines potentially facing large price hikes, buying or selling used equipment could become a viable strategy – or a missed opportunity.