As equipment appraisers, our role is to provide accurate valuations based on market conditions, supply chain factors, and economic influences. One of the most significant factors shaping equipment values today is the impact of tariffs—particularly those implemented under President Trump’s administration. With tariffs driving up costs on imported machinery, we must evaluate how these changes influence both the new and used equipment markets.
From an appraiser’s standpoint, tariffs create ripple effects that alter the fair market value (FMV), orderly liquidation value (OLV), and forced liquidation value (FLV) of machinery and equipment. Understanding these trends allows us to provide clients with informed assessments, whether for lending, asset-based financing, or business planning.
How Tariffs and Equipment Values Affect the Used Construction Equipment Market
In the construction equipment market, tariffs on imported machinery have led to higher costs for new equipment. This has a direct impact on the used equipment sector, as buyers who might have opted for new machines are now considering pre-owned alternatives due to affordability concerns.
From an appraisal perspective, we are seeing:
- Upward Pressure on Used Equipment Values – As the price of new machinery rises, demand for used equipment strengthens, driving up FMV.
- Extended Equipment Lifecycles – Owners are holding onto their machines longer rather than upgrading, which affects turnover rates in the secondary market.
- Potential Overvaluation Risks – While demand may temporarily inflate prices, appraisers must be cautious about recognizing short-term market spikes that may not be sustainable.
However, if tariffs lead to an economic slowdown in the construction industry, we could see a reverse effect—an oversupply of used equipment entering the market, which would depress liquidation values.
Tariffs and Equipment Values: The Impact on Used CNC Machines and Manufacturing Equipment
Similarly, tariffs on imported manufacturing equipment, particularly CNC machines and other precision tools, have caused price hikes in the new equipment market. Manufacturers dependent on foreign-built machinery are now reconsidering their purchasing strategies, which has implications for appraisers valuing these assets.
Key considerations for appraisal include:
- Increased Demand for Used CNC Machines – With higher import costs, many businesses are turning to the secondary market, raising values for well-maintained equipment.
- Stable or Rising Liquidation Values – Unlike in oversaturated markets, where liquidation values decline, CNC machines with strong demand may retain higher-than-expected OLV and FLV.
- Sector-Specific Volatility – Some manufacturers may struggle with cost increases and reduced output, which could lead to equipment sell-offs that shift market values.
Key Considerations for Appraisers
As equipment appraisers, we must remain aware of the broader effects tariffs have on machinery values. Here are key considerations when conducting appraisals in a tariff-influenced market:
1. Increased Replacement Costs
With tariffs raising the price of new imported equipment, replacement cost values need to be adjusted accordingly. This factor can lead to higher FMV for comparable used equipment.
2. Market Volatility and Unpredictable Demand Shifts
Tariffs introduce uncertainty into the marketplace. Some industries may benefit from increased demand for domestic equipment, while others may face slowdowns due to higher costs. This volatility requires appraisers to track real-time market trends rather than relying solely on historical data.
3. Potential for Depressed Secondary Market Prices
While some equipment categories see an increase in value due to tariffs, others may experience an influx of used machinery hitting the market. If industries struggle with tariff-related costs, liquidations may occur, lowering values in the secondary market.
4. Changing Preferences Between Domestic and Imported Equipment
Tariffs shift buyer behavior. If tariffs on foreign-made machinery make domestic options more appealing, equipment origin may play a larger role in valuation. Appraisers need to consider whether certain brands or models are becoming more or less desirable due to policy changes.
5. Cost Pass-Through and Buyer Behavior Adjustments
Higher prices for new equipment mean buyers may shift toward used alternatives, temporarily increasing demand. However, appraisers must evaluate whether these trends are sustainable or if they indicate a short-term price bubble.
Tariffs and Equipment Appraisers
From an appraiser’s perspective, President Trump’s tariff policies introduce new challenges in valuing machinery and equipment. While some used equipment categories are seeing increased demand and higher FMV, others face liquidation risks and market volatility. Our role as appraisers is to navigate these shifts carefully, ensuring that valuations accurately reflect current economic conditions.
Staying informed on tariff changes, supply chain disruptions, and industry trends is critical to providing defensible and reliable equipment valuations. As policies continue to evolve, appraisers must adapt their methodologies to account for these economic forces, helping clients make informed financial and operational decisions.