The Tariff Edition

So fun, right? We get to talk about global economics. The stock market’s been a yo-yo lately, and global trade is in a state of uncertainty like we’ve never seen—ever. Consumers are nervous. Companies (like Callaway) are bracing for cost increases. So how did we get here?

Tariffs have been around for centuries. Governments wanted their hand in what was being sold and traded between two countries, so they charges a tariff to get their piece of the pie. And then… We had an industrial revolution—remember that one? We (the United States) figured out how to make just about anything and built factories to do it. Soon we were shipping goods all over the world, and the U.S. became the largest economy on the planet.

Two things happened in the decades that followed:

1. Other countries wanted in—and got really good at certain things.
2. U.S.-made goods needed imported parts to get built.

That combo kicked off what we now call a global economy. It actually became cheaper for U.S. companies to build things overseas and ship them back, rather than import all the pieces and put them together here.

Enter further tariffs and duties.

Countries didn’t want their industries shipped off and profited on somewhere else. They also wanted the tax revenue from products produced in their own country that were being sold somewhere else. So they slapped tariffs on both incoming AND outgoing goods. And now? We’re living in a tariff tornado. Tariffs going out. Tariffs coming in. On everything. Going everywhere.

What’s happening right now is a push by the U.S. President (not getting political here) to create a version of global free trade. The message is basically: You tariff our stuff? Fine. We’ll tariff yours. Drop yours, we’ll drop ours. Level the playing field.

Sounds good in theory. But in the real world? If this doesn’t happen, or until it does, prices are going up. The consumer eats that cost. Always has. Still does. Companies pay the tariffs, then pass those costs downstream. It shows up on the price tag. The end game? Ultimately, prices could wind up lower. Wouldn’t that be nice.

Let’s rewind to 2016. Same idea—targeted tariffs on some countries. Companies had two options: deal with the cost, or move manufacturing. Callaway made the move—we shifted clubhead production from China to Vietnam, built new factories, and dodged the tariff bullet.

Life was better. For a bit.

Now? Nobody’s exempt. Tariffs are hitting every country, every product. Clubheads? Tariffed. Shafts? If they’re made outside the U.S., they’re tariffed. Even the materials used to make those shafts—if imported—can be tariffed. Grips? Same deal.

We assemble clubs in Mexico. We now pay a tariff on that labor, too. Ugh. The idea here is to blow up this web of tariffs and create a clean slate—but it’s going to get messy first.

Finished goods get hit hardest. Bags, gloves, packaged sets—whacked. Range balls?? Brace yourself. If you’re wondering why some of that gear has skyrocketed in price over the past 20 years… this is it.

What does this mean for us?

Unless something changes—and it could, at any time—our inventory costs are going up. We don’t want to raise prices, but we can’t keep absorbing these increases. We’ve already eaten a chunk of it. We’re maxed out.

Right now, we’ve got product in the U.S. at current price levels, and we’re doing everything we can to bring in more before the next wave of tariffs hits. We’re exploring moving our custom lines to Texas to avoid tariffs on assembled goods from Mexico. We’re pulling every lever we’ve got to keep things affordable—but we’re fighting gravity here.

What can you do?

Do you have inventory in your shop? (Nod your head. Yes.) Sell it.

That old saying “order custom, it’s quicker”? Not anymore—and it’s definitely not cheaper. As product moves into the U.S., custom orders will get slower, not faster. And, quite possibly, more expensive.

When we do fittings, plan on having inventory close by. Fit to what you’ve got. You may need to regrip here and there, but having gear on hand will matter more than ever.

Remember the chip shortage in cars during COVID? People bought whatever they could get their hands on. This might feel similar. As goods get more expensive, budgets will become tighter. As budgets become tighter, people will gravitate towards the things that they kept in their budget. That membership to your club?? It’s already paid for. People will double down on the stuff they love and already have in the budget before moving on to something new—and for a lot of them, that’s golf.

This could actually be good for the game. More golf, more gear, more players investing in their equipment. But only if we’re ready.