Earlier this year, Fender’s credit rating took a hit when Moody’s downgraded the iconic guitar maker, citing growing financial pressures and U.S. tariffs. Now, a new report from S&P Global (by way of Guitar World) paints a mixed picture of Fender’s short-term strategy and long-term outlook.
To weather the storm, Fender raised prices by 5% across its entire portfolio, a move S&P Global says has been more effective than competitors that avoided hikes or paused imports from China. That’s no small feat, given that 40% of Fender’s purchases come from China, with half of those entering the U.S.
The strategy appears to be paying dividends in some areas. Sell-in sales to major retailers like Sweetwater, Guitar Center, and Amazon have exceeded expectations, with high-income consumers continuing to value Fender’s prestige. But the brand is still feeling the pinch in smaller, independent U.S. dealers, where cautious inventory management and tighter discretionary spending are leading to falling volumes.
S&P Global notes that Fender’s approach “is proving more effective than competitors,” but still projects a “negative outlook” over the next 12 months. With weaker consumer sentiment, rising secondhand sales, and lingering tariff uncertainty, Fender’s operating performance and liquidity could face more pressure than anticipated.
Looking ahead, the report suggests 2026 may bring improving volumes from new product innovations, but overall revenue growth is expected to remain minimal. Dealers, S&P warns, will likely stay cautious, while Fender’s reliance on a strong holiday season leaves it particularly vulnerable to market shifts.
These challenges reflect the broader state of the U.S. musical instrument industry. The Peterson Institute for International Economics reported an 8.4% drop in U.S. musical instrument exports from January to July 2025 compared to the 2021–24 average, with markets like Brazil, Canada, and China showing declines. While tariffs are part of the story, analysts point to a wider mix of trade policy uncertainty, higher consumer costs, and substitution away from U.S. products.
As NAMM CEO John Mlynczak told Guitar World in May, the American instrument market is navigating a perfect storm of trade tensions, shifting consumer habits, and economic headwinds: “The consensus is these tariffs can be really devastating for our industry and it’s devastating in several ways.
“It’s not just the sudden costs that will have to be figured out by companies individually, but it’s also the disruption of supply chains. It’s the unpredictability, uncertainty, and the suddenness of the tariffs. Companies do not have the time to plan, adapt, evolve or make any changes.
“We are leading a small delegation in D.C. to specifically meet with the Ways and Means Committee members [the government body which shapes fiscal legislation including taxes, tariffs, and social service programs] and to lobby against tariffs.”
Fender may be holding the line for now — but the battle is far from over.
