Anyone who isn’t aware of the tit-for-tat tariff war going on with China probably isn’t checking their e-mail much. We’re going to assume that readers are reasonably up to speed on the tariff war and the price of an RV and jump right in.
While most of the RVs in North America are built and sold right here in the U.S. (and Canada, to an extent), they feature lots and lots of foreign made (as in Chinese) parts. This is hardly surprising anymore, but it is presenting an interesting dilemma. More on the definition of a tariff war here.
Chinese manufacturers have grown in leaps and bounds for more than a decade now. This is largely due to their sales in the U.S. As they have grown, American manufacturing has tumbled. The reason for this is low (very, very low) labor costs there, and a government willing to manipulate its currency to their benefit. American manufacturers, unable to compete against a stacked deck, have survived by taking an “if you can’t beat them, join them” attitude, and increasingly turned to China to supply parts and components. In the last twenty years we’ve gone from being a country of manufacturers to a country of consumers.
Along the way, many U.S. suppliers have closed up shop. This can be concerning for a number of reasons such as during times of war, the U.S. has historically pressed many of these suppliers in to service, building items needed by the military, for instance. It has enabled the finished product manufacturers (like those that assemble and sell RVs) to flourish. Some people see it as a sign of an emerging global marketplace. Others see it as a worrying sign that we’re overly dependent on a country we don’t always see eye-to-eye with.
Not wishing to open up a political debate here (there are PLENTY of other places to voice your opinion online, if you’re so inclined), here at RVReviews.net we are more interested in explaining the ramifications for those considering an RV in the near future.
In a nutshell, prices have crept up over the past year, but profits have dipped. Renegade RV, a builder of high end Class C+ motorhomes, recently advised that they have been notified of tariff-based price increases from 75% of their suppliers. This is typical of what we’ve heard from almost all RV builders. Price increases seem to be in the 10-20% range. To make matters worse, RV sales have dipped for 2019. Whether this is the result of higher-priced RVs or simply a hangover from the robust sales years of 2016-2018, it’s hard to say.
What this looks like in black and white is an RV industry facing a double-edged sword of rising costs and diminished sales. Where it goes from here is anyone’s guess.
With that in mind, it’s worth mentioning that the RV industry is well known for slightly hysterical feast or famine cycles. In good times they can’t build fast enough and splash out big money on larger factories and more employees. In bad times they’re stuck with an abundance of unsold RVs cluttering up their dealerships and too many employees with nothing to do.
The RV industry is kind of like the loopy brother-in-law some of us have who shows up for Thanksgiving flush with cash and driving a new Cadillac one year. The next year they need bus fare and a place to crash.
The RV manufacturers don’t quite need bus fare this time. But they are holding off on a new car for the time being. In our opinion, the tariff war will get worse before it gets better, but it shouldn’t get a lot worse. The U.S. is engaging in a game of chicken with China right now, and whoever blinks first will lose. But neither will be willing to lose a lot. The end result will probably involve slightly higher prices from China (slightly bad for consumers). However, it will offer but a more level playing field for U.S. suppliers (good for U.S. manufacturers).
More on THE TARIFF WAR AND THE PRICE OF AN RV TODAY
Things will swing back at some point –they always do- and RVs will be flying off the shelves again. The future will look great, and frantic manufacturers will be yelping about a shortage of labor.
And somewhere, decked out in a spiffy new suit and pinkie ring, your brother-in-law will be eyeing the new Cadillacs.
Some things never change.