Tariffs create uncertainty for security Industry

The security industry is keeping a keen eye on developments after President Trump’s America First Trade Policy announcement about increasing tariffs to 25 percent on steel and aluminum starting on March 12 for not only Canada and Mexico but also for many countries outside North America.

“The order revives the Section 232 tariffs that were implemented during the first Trump Administration in 2018, raising tariffs on aluminum imports from 10% to 25% and reinstating the full 25% tariff on steel imports from countries that had received exemptions in subsequent years, specifically Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine, and the United Kingdom,” explains Lauren Bresette, senior manager, Government Relations, Security Industry Association (SIA). “All exemptions to the steel tariffs for these countries will become ineffective when the order goes into effect as of 12:01 a.m. EDT on March 12, 2025.”

In addition to the proposed tariffs, a slew of executive orders around border protection, artificial intelligence (AI), and downsizing the federal workforce (see sidebar), are posing both challenges and opportunities and challenges for the security industry.

Security Industry Raises Concerns

Locksmiths, along with many security pros, are concerned that the president’s proposed tariffs could raise costs on security products, many of which are manufactured outside the U.S.

“The potential tariffs on steel and other security products have certainly raised concerns within our business,” says Chad Lingafelt, managing partner, Loc-Doc Security. “We're wary of a repeat of the pandemic-era disruptions to raw materials, which triggered significant cost increases and, consequently, continuous price hikes from manufacturers.”

Beau Edelen, senior VP of sales and business development, Lockmasters, summed up the industry’s current feelings on possible tariffs with one word – “Uncertainty. It seems like the security industry, and most industries, are waiting to see what is going to happen and how that may impact the business. Hopefully we all have some clarity very soon,” he says.

Lingafelt agrees, adding, “This situation underscores the importance of robust cost and expense management for businesses. We're currently conducting an expense audit and have been tracking line-item costs for several years. This practice enables us to adjust our pricing in real-time as costs increase. While manufacturer price increases are inevitable, vigilant monitoring and measurement can prevent them from impacting our profitability.”

Bresette says that many manufacturers SIA works with are concerned that if these tariffs are implemented, costs will rise, and they'll eventually be forced to respond to the cost increases in the supply chain by raising prices for these devices.

“There's been a lot of concern about specifically the Mexico tariffs, which it seems like there's a lot of security technology and manufacturing assembly occurring there,” says Bresette. “In the case of the long-term implementation, we have a lot of members who are concerned about a loss of competitiveness in the market, or the fact that there's not really an alternative supply of critical components. This matters more for the China tariffs. I think during the first Trump administration [and COVID], a lot of people who were able to move production out of China did, and so the production that remains there is for critical components that they can't get elsewhere.”

International Emergency Powers Act

As Bresette points out, President Trump also cited his authority within the International Emergency Powers Act (IEEPA), which grants the president broad authority to act against an “unusual and extraordinary threat” to U.S. national or economic security originating outside the United States. In this case, she says the White House cites the national emergency with respect to the grave threat posed by the influx of illegal aliens and illicit drugs into the United States, including references to Proclamation 10886 of Jan. 20, 2025 (Declaring a National Emergency at the Southern Border).

“By using the IEEPA, the president must identify the specific threat and the actions necessary to address the threat, consult and report to Congress and renew the findings and justification through periodic reporting after its initial use,” she explains. “Congress may terminate the emergency by passing a joint resolution; however, to this date Congress has never overturned an emergency under IEEPA. In past scenarios where tariffs were imposed through executive branch action (they can also be imposed via congressional acts), Congress typically acted in an advocacy role, urging either the implementation or removal of tariffs during review periods and throughout the administrative process, including through submitting testimony in favor of exclusions when a process was established to do so.”

Bresette says the tariffs could also be a way to gain leverage to achieve other goals, with President Trump’s secretary of commerce nominee, Howard Lutnick, suggesting in his January confirmation hearing that Mexico and Canada could avoid the tariffs if they took appropriate action to address Trump’s concerns, noting that the administration has made it clear that it believes “tariffs are a powerful, proven source of leverage for protecting the national interest” and that President Trump is “using America’s economic position as a tool to secure our borders against illegal migration and combat the scourge of fentanyl.”

She adds that the administration could “lay out actions in each executive order that would allow the president to grant relief at his discretion,” including:

·       Canadian tariffs: In Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border, the secretary of homeland security shall inform the president of any circumstances that indicate that the government of Canada has taken adequate steps to alleviate this public health crisis through cooperative enforcement actions.

·       Mexican tariffs: In Imposing Duties to Address the Situation at Our Southern Border, the secretary of homeland security shall inform the president of any circumstances that indicate that the government of Mexico has taken adequate steps to alleviate the illegal migration and illicit drug crisis through cooperative actions.

·       Chinese tariffs: In Imposing Duties to Address the Synthetic Opioid Supply chain in the People’s Republic of China (PRC), the secretary of homeland security shall inform the president of any circumstances that indicate that the PRC government has taken adequate steps to alleviate the opioid crisis through cooperative actions.

Impact of Executive Orders 

In addition to trade policy, executive orders on border security and artificial intelligence (AI) could potentially impact the security industry.

“The border security directive presents a significant opportunity for security technology providers and system integrators,” says Dave McCarthy, program manager for government relations at Axis Communications, who points out that the executive orders call for barriers supported by technology and personnel, which could lead to increased government contracts for security technology providers, integrators and installers.

“The executive office will direct personnel and resources to the southern border to bolster security, creating ample opportunities for the security industry to offer products and solutions to government agencies,” says McCarthy. “As a result, we can expect an increase in government contracts related to border security in the coming weeks and months.”

Lynn de Seve, president of GSA Schedules, echoes this sentiment, highlighting the potential for the industry to provide expert knowledge and the latest technology to complete unfinished projects. “With a renewed strong focus on securing the border, including finishing the wall, there will be significant opportunities for the industry,” she says.

Jake Parker, SIA’s senior director of government relations, points out that while the executive orders do not explicitly outline new investments in border security technology, a legislative package is expected to provide significant funding for the Department of Homeland Security (DHS), U.S. Customs and Border Protection (CBP), and Border Patrol. “We expect significant new funding for border security in what they call the reconciliation package,” Parker explains. "I think we can expect to see some technology-specific funding in there.”

Parker also sees opportunities for security pros coming from the new AI executive order, which aims to keep the U.S. as a leader in AI innovation. “The federal definition of IT systems includes physical access control systems, video surveillance systems and alarm systems,” says Parker, who notes that the Government Efficiency executive order prioritizes modernizing federal technology, including physical and electronic security systems. “Some agencies are in dire need of upgrades, and this policy could open up investment opportunities.”

The president’s “return to in-person work” directive, which aims to bring more federal employees back to office spaces, may accelerate investment in building security systems, adds Parker.

Note: This story was done with additional reporting by Rodney Bosch, chief editor, www.securityinfowatch.com.