35-year-old in Nashville may have to move family business overseas due to Trump tariffs: 'We can't double the price'

CNBC

14-05-2025

For over 60 years, the speakers made by Auratone may have helped bring some of your favorite songs to life.
Auratone, founded in 1958, is the company behind the 5C speaker, which in the 1970s became a go-to for studio engineers and the one used to mix Michael Jackson's album "Thriller." To date, the company says audio engineers have used Auratone speakers to mix songs by musicians including Paul McCartney, ABBA, Lady Gaga, Taylor Swift and others.
Like many other U.S.-based small businesses, the family-run Auratone has had to reckon with complicated and costly new realities due to new tariffs from the Trump administration, says Alex Jacobsen, the company's president and owner, and grandson of Auratone founder Jack Wilson.
Jacobsen, 35, estimates that roughly half of the parts for each speaker, some of which are no longer available in the U.S., are sourced from overseas, including China and Europe. The company's products are then manufactured in either Nashville or Minnesota before they're shipped to customers across the U.S. and around the world. Roughly 60% of Auratone customers are international, Jacobsen says.
That means, due to countries introducing their own retaliatory tariffs on U.S. imports, Auratone will be hit from "both sides" as it brings in parts for manufacturing and sells to customers abroad, Jacobsen says.
This isn't the first time Jacobsen has had to work tariffs into his business model. Beginning in 2018 during Trump's first administration, some of the parts that make up an Auratone speaker were subject to a 25% tariff to be imported from China, Jacobsen says. The move bumped up the company's costs a nominal amount, but they didn't raise prices for customers, Jacobsen says.
Jacobsen says the current situation is more dire. The parts he imports from abroad are now subject to a new 10% universal tariff, and potentially higher ones for certain countries after a temporary pause is expected to lift in July. Then there's the whopping 145% tariff on goods coming in from China that went into effect on April 2 and were paused as of this week.
While the U.S. and China agreed Monday to pause most of the tariffs on each other's goods for 90 days, as CNBC reports, Jacobsen says his company will be expected to pay an additional $20,000, if not more, in new import taxes due to ongoing trade negotiations.
"You can absorb a 10% to 15% increase, but when you get hit with 170%, that's a different story," Jacobsen says, explaining the cumulative effect of the recent 145% rate on top of existing 25% tariffs on Chinese parts for his company.
"If you start tacking these all throughout the chain and with the retaliatory tariffs — we can't double the price of our speakers," Jacobsen says.
Auratone's flagship speakers currently run $749 a pair.
Jacobsen wonders what will happen after the 90-day pause. President Donald Trump said tariffs on China would not go back to 145%, even if a longer-term deal cannot be reached once the 90-day pause expires, CNBC reports.
"But they would go up substantially," Trump added.
Some international buyers have begun stocking up on Auratone equipment, Jacobsen says.
Auratone completes roughly $400,000 in sales per year, according to documents reviewed by CNBC Make It. By April, the company was nearing $200,000 in sales as buyers pushed up their purchasing timelines, possibly worried that new tariffs would lead Auratone's prices to rise.
Trump says his administration's tariff policy will protect U.S. jobs and encourage more businesses to bring their manufacturing efforts stateside. Jacobsen says tariffs could have the opposite effect.
Among his many scenarios of how to keep the business alive, one is to move Auratone's manufacturing overseas, likely to Europe. Jacobsen says roughly 35% of its customer base is there, and the company could then benefit from free trade agreements within the European Union, UK and new trade partners.
Jacobsen isn't alone. Most companies, 57%, say high costs will keep them from moving manufacturing back to the U.S., according to a CNBC Supply Chain survey of 380 businesses fielded in early April. If they do bring manufacturing stateside, 81% expect to automate more work rather than hire people for jobs.
Meanwhile, roughly half of businesses said building a new domestic supply chain would at least double their current costs. Just over 60% said it would be more cost-effective to move their supply chains to lower-tariffed countries.
Some small business owners have challenged the new tariff rates. A cohort of five small businesses sued the Trump administration April 14 seeking to block the new tariffs, CNBC reports, alleging that Trump illegally usurped Congress' power to levy tariffs by claiming that trade deficits with other countries constitute an emergency. The following week, a U.S. federal court ruled that the tariffs would remain in force, saying the businesses had not shown they would immediately be harmed by new taxes on imports, Reuters reports.
Jacobsen is still hopeful he can keep part of the Auratone production line in the U.S.
"Part of the legacy of the business is building these here, and it's been my dream and my inspiration to keep doing that," Jacobsen says. "But if it forces a situation where we have to [move manufacturing abroad], then we'll do we have to do. But it's not my preference."
Jacobsen, who took over his grandfather's company roughly a decade ago, says he'd rather see the federal government provide other incentives to small businesses who manufacture in the U.S., such as by providing tax breaks. He notes that his grandfather built Auratone with funds from the GI Bill after serving in WWII.
"It just seems to me there'd be more easier ways to incentivize manufacturing here, if that was truly the intention," Jacobsen says.