The Art of the Trade: How Unstable Tariff Laws Affect Arts and the Music Industry
- Lucy Sagoo
- 5 days ago
- 8 min read
In the last few months, countries worldwide have been eagerly watching the evolution of American tariff and trade policies. Every week there seems to be a new schedule or scheme for American trade. Scarily, this trade imbalance affects every industry and, on a grander scale, almost every country on the face of the planet. Artistic industries are not excused from this uncertainty. Musicians, artists, tech companies related to streaming services, musical instrument manufacturers, and more are deeply affected. This leads to one simple question Marvin Gaye first had the insight to ask: “What’s Goin On?”
The Legal Framework Governing US Tariffs
Tariff policy has long been an instrument of legal trade regulation in the United States. With the passage of the new United States Constitution, ratified in 1789, the federal government was formally empowered to levy uniform tariffs in trade with foreign nations under the Tariff Act of 1789, through Congress’s power of taxation. Since then, multitudinous amendments, acts, and agreements have contextualized and deepened the complex tariff policy governing the taxation of foreign trade for the United States economy. Not only do legal tariffs create a large amount of revenue for the US government, but they have a vast strategic purpose. When enforced under the legal limits of Congress, trade tariffs are intended to discourage unfair trade practices, reduce trade deficits by depressing imported products, protect American companies while creating a competitive market within the country, and more.
In recent years, routine tariff policy decisions have been increasingly delegated to the Executive Branch through acts of Congress– most notably through Section 301 of the Trade Act of 1974, which authorizes the President to impose tariffs either in the interest of national security or in response to grossly unfair trade practices. Several key agencies are often involved in the setting of these tariff policies: the Office of the U.S. Trade Representative – an office currently led by Jamieson Greer, a Trump administration appointee and former trade litigation attorney –, the U.S. International Trade Commission (ITC), and the Department of Commerce. Should a foreign nation or individual business take issue with the Executive Branch’s imposition of tariffs, they may challenge the rules. In the United States, stakeholders can bring their issues to the Court of International Trade (CIT). International actors must make a claim of violation of trade agreements and request remedies through the World Trade Organization (WTO). Through this treacherous web of historical context and politically motivated expectation setting, companies – both foreign and domestic – must slog to find their place in the market, let alone profit.
In the last few months, trade policy – specifically tariffs – has become an extreme focus of the second Trump Administration. Beginning in early April 2025, the administration imposed a baseline tariff of 10% globally. Some nations – China, Canada, and Mexico especially – received tariff rates upwards of 20%. As of April 9th, 2025, the tariff on Chinese goods was set to 104%, with few, if any, exceptions beyond refined oil products. Though subject to change under the Administration, the economic impact of these policies has already affected almost every industry in the United States by creating instability in the US stock market. The tariff policy imposed will immediately affect the prices of goods in the US consumer economy and place the market at extreme risk of recession according to economists. Artistic industries are not safe from the economic fallout resulting from the recent reign of tariff terror. Music industry players – especially importers of instruments, digital hardware producers, and companies with offshore data storage facilities – must face the consequences of clashing markets and international trade rules.
Tariff Impact on Music Equipment and Manufacturing
There are several ways in which the music, and other art industries, will feel the weight of the newly imposed tariff policies. The first, and most obvious, sector of the music industry to feel the effect will be businesses that make, ship, or use musical instruments. The change in classifications of musical instruments and components under the new Harmonized Tariff Schedule imposes a new 10% tariff on any of these items, and over 100% tariff if those products are made in China. Most musical instruments, beyond niche markets for high-end products, are made in China. This includes instrument components, amplifiers, recording equipment, microphones, sheet music, and more. The American artistic community benefits wholeheartedly from the lower costs of Chinese-made instruments because they allow more consumers access. A select few people can pay the premium price to buy an American-made Fender Musical Instruments guitar. These instruments can cost anywhere from $1,200 to $30,000– a price range that is largely inaccessible for most elementary school music programs.
In response to these unstable policies, musical instrument companies, including famous names like Gibson and Fender, have petitioned the United States Trade Representative (USTR) to create exclusions from Section 301 tariffs on particular components. An influential number of corporate companies have joined a multi-industry lawsuit to challenge the legality of newly imposed American tariffs. The In re Section 301 Cases - entered in the Court of International Trade - is a case that condensed over 3,600 separate lawsuits filed by US importers in direct response to tariffs on Chinese goods. They claim that (1) the USTR acted beyond its authority under Section 301, (2) that the agency failed to follow the proper Administrative Procedure Act (APA) procedures by not adequately responding to public comments, and (3) that there was an improper delegation of Congressional tariff authority to the executive branch in this case. In March 2023, the Court of International Trade upheld the action of the USTR, finding that the agency's decision-making process for the tariffs was legally sufficient. However, this will not be the end of these legal battles. The decision has since been appealed to the US Court of Appeals for the Federal Circuit. Separately, the National Association of Music Merchants (NAMM) has submitted public commentary to the USTR and has begun coordinating efforts to provide members with legal guidance to address challenges arising from evolving tariff policies.
If these industries act fast, under the new tariff policies, companies will shift their production of instruments to nations with lower tariff rates. Legal battles in the US, though slow and storied, may provide some relief in their ongoing findings. Nevertheless, this will not completely erase the high cost faced by the average consumer. A 10% tariff imposed on any nation that exports goods to the US will have a ripple effect, increasing prices throughout the global supply chain. These prices may not cripple the creation of musicians who are already famous, but they will significantly decrease the amount of cultural enrichment from new and underfunded artists. Then we must ask ourselves, what would Woody Guthrie say?
Digital Goods as a Mechanism of Intellectual Property Considerations
If consumers are not worried about the overwhelming hazard that unstable tariff policies may have for factory-to-consumer products in the music space, then the next place to watch is digital art. Digital streaming of music, specifically, has contributed to a notable increase in the music industry’s profit margins. According to Statista.com, recent data show that as many as 700 million people stream their music online leading to an estimated jump of 15 times the music streaming revenues in the last 10 years. This is the largest profit margin the music industry has accrued in the past decade. It is safe to say that streaming is the music business's newest and strongest cash cow.
Currently, digital music is considered a non-tangible good to trading nations. Most digital content, due to a long-standing moratorium imposed by WTO on customs duties for electronic transmissions, does not slot nicely into tariff math. Being in the business of trading digital art creates great regulatory uncertainty for streaming investors. Like other companies, streaming corporations depend on the components to run their streaming platforms: smart speakers, hardware components, data bank parts, etc. The bureaucracy of US Congress is a slow-moving tool of trade and its inability to correctly categorize products that fall into both digital and analog sets the entire industry on the precipice of tariff challenges. Any change to these policies could deeply affect the US
technology companies that are heavily invested in distributing digital music, creating a limit on products or a hike in price for consumers. As other countries react to unstable tariff policies, they may consider adding digital trading laws and encourage the WTO to change or dissolve the moratorium on digital products. This would have a disastrous effect on both the music and related technology economies.
Related to digital music, licensing a copyrighted work to a streaming service in a foreign nation is essentially an export. However, these transactions have yet to be subject to tariffs or duties under the past trade scheme. Issues of piracy, unlicensed imports, unlicensed material, or unauthorized distribution are legal issues that have been largely controlled under the customs power of the US government. The growing market of streaming and its increasing economic value have inspired debates about whether these products should be subject to tariffs in the future. The United States is the world’s leading producer of e-talent, including music, social media, and film. If other countries intend to push the WTO to change policies in the face of
unstable US tariff policy, it could greatly affect the amount of electronic art products that can find the world market from inside the United States.
Both Canada and Mexico agreed to digital trade and intellectual property customs bans as a part of the United States-Mexico-Canada Agreement. The bans are outlined in the cross-national agreement as safe harbor rules provided for online streaming companies that allow monetization of streaming across borders without disturbing foreign harmony. Beyond this, the World Intellectual Property Organization (WIPO) has a Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement which sets a minimum standard for copyright protection in the digital environment. Implemented, along with these agreements, are the WIPO internet treaties – WCT and WPPT – which govern the rights for digital distribution. Severe changes in trade and tariff agreements by the Executive branch may create fissures in foreign trust regarding these agreements with the United States and lead to stagnation in the digital art industry.
The Recording Industry Association of America (RIAA) has focused on digital and IP trade issues through its public comments. The organization has advocated for fair cross-border licensing laws and IP enforcement, even in the face of evolving American tariffs. As a key lobbyist for individual musical artists on streaming platforms across the United States, the RIAA must be aware that ignoring the challenges posed by new tariff policies would constitute a serious disservice to the American music industry.
Further, these large platforms will undoubtedly be forced to choke up on the repatriation of royalties to foreign artists. If countries begin to tax these digital services differently, the friction with foreign artists will likely become hard to overcome. The market of free art trade across the globe will hardly be warm, fuzzy, and working fast.
The Role of Legal Professionals in A Trade Crisis
Though tariffs have largely become a tool of the executive branch and policy experts of the United States government, there is still much room for attorneys and legal professionals to reduce the impact and damage caused by new trade policies. Entertainment, intellectual property, art, and corporate attorneys can revise international supply contracts for clients and corporations to account for tariff risks. Companies should create contracts for international business which include force majeure clauses and pricing adjustments based on sliding tariff rates.
Mutli-national corporations and companies can add extra auditing trade compliance procedures to ensure they stay apprised of the tariff classifications and the country-specific rules that directly affect their products. Legal professionals can also provide counsel on different ways to efficiently restructure supply chains to reduce exposure to high-tariff countries. This includes looking to foreign investment and tax laws that may create challenges for artistic professionals. Of course, attorneys can support individuals and companies by joining or bringing cases, such as the In re Section 301 Cases, to relevant courts and demanding appropriate powers be leveraged.
There is no doubt that ever-changing economic policy has muddled the future of the products of arts in the United States for the foreseeable future. However, if appropriate measures are taken, if companies prepare, legal challenges persist, and warnings by professionals are heeded, this may not, in fact, be “the day the music died.”
*The views expressed in this article do not represent the views of Santa Clara University.
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