“I’ll have to scratch my chin to think about it. Can I still make a profit?” Electro-Harmonix founder Mike Matthews reveals legendary pedal firm’s struggles in the face of Trump’s tariffs

Electro-Harmonix founder Mike Matthews has discussed how new tariffs imposed by President Donald Trump will be affecting the legendary pedal firm, as the impacts of the “Trump tax” begin to be felt across the guitar gear world.

Earlier this month, Trump put into effect 25% tariffs on imports from Mexico and Canada, and also introduced new tariffs on goods entering the US from China. Over the past week, the effects of these have been widely reported by gear manufacturers.

Moody’s downgraded Fender’s credit rating score, directly citing new tariffs and estimating production costs could increase by $20 million partly as a result. Boutique builder Morgan Amps calculated the price for one of its own amps could rise by $1,000 as a result of hiked costs.

Now, Matthews has highlighted what these new tariffs will mean for EHX – a company that has the inventory to weather the storm for a short time, but will nonetheless inevitably be affected by ballooning costs if they persist.

“We’re gonna have to continue to buy our raw materials from overseas, even with the tariffs,” Matthews concedes in an interview with Bloomberg [paywall]. “Trump’s policy on tariffs will definitely bring very big companies into America for the manufacturing, but small and medium companies, their volume will not be big enough.”

As Bloomberg reports, EHX has been repositioning its strategy to avoid an over-reliance on China, sourcing some of its components from places such as Taiwan to do so.

Furthermore, EHX can afford to delay immediate shipments from China, and owing to the firm’s “very deep inventories on most all of our pedals we make, we can ride out this storm,” Matthews adds.

However, this is not a longterm solution. Like many gear firms, EHX sources its internal pedal components overseas – China included – and as such there will come a point where Matthews and EHX will have to address a potential price rise.

Not only that, these tariffs are exacerbated by the fact EHX owns a vacuum tube factory in Russia – a country which has a 35% tariff against its imports.

And, given the competition EHX already faces in the pedal market, its first price rise in two-and-a-half years to absorb the rising production costs might be too risky.

“I’ll have to scratch my chin to think about it – you know, can I still make a profit?” Matthews adds. “You sort of like just guesstimate. Like by raising your prices, what will that do?”

Whatever the case, bringing circuit board manufacturing into the US is out of the question – “That would be a really huge investment” – and as Matthews reveals, he might not be in control of EHX for much longer.

“I am open and have been in the process of trying to sell the company,” he concludes. “It’s a difficult time.”