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Comprehensive analysis: what is the effect of US tariffs on LED industry?
- Aug 27, 2018 -

Since April this year, the US Trade Representative Office (USTR) announced a list of 301 sanctions imposing 25% tariffs on more than 1,300 Chinese-made products, the Sino-US trade war has formally entered a white-hot situation. In July, the U.S. government again released a tariff increase list, which is expected to increase taxes on $200 billion worth of Chinese products by 10%. LED components and products are listed in the two-stage list of 301 sanctions. As the second phase of the $16 billion Chinese product tax list comes into effect, LED in will provide readers with a comprehensive analysis of the impact of the Sino-US trade war on the LED industry.

First, from the first phase list that came into effect in July, the affected LED products are mostly semi-finished products, including silicon wafers and backlight products. According to an analysis previously published by LED inside, the tariff list hits American companies that have capacity in the United States and must import semi-finished goods from China.

From the impact point of view, since most of the LED lighting products exported in China are finished products, the impact on the price of LED lighting products is not obvious at present. In this regard, LED inside analyst Wang Ting also pointed out: "The lighting market demand is still sluggish in July, but the price decline has not been observed. "

The second wave of the 200 billion-dollar list, which has yet to be determined when and how long it will take to implement, covers a relatively wide range of LED products, including more than a dozen LED and lighting items. The total export value of these items covers nearly 75% of China's lighting exports, and the amount exported to North America is as high as 80%. Billion dollars or more. It is undeniable that the United States has always been an important export market for LED lighting products in China. The Sino-US trade war is prolonged, and the impact on China's LED industry or related companies in the United States will be unavoidable.

From the current supply of LED lighting products, 85% of LED lighting products are produced and assembled in China. Although there are still LED lighting production lines outside China, but for the vast U.S. market demand, the capacity outside China is not enough to meet the U.S. market demand. Therefore, in addition to the impact of tariff lists on Chinese and U.S. manufacturers, if manufacturers reflect the increase in costs on prices, U.S. consumers may also face price increases in end products.

In fact, after the U.S. government released the two-wave list, it was the U.S. companies that took the lead in announcing that their operations would be hit. Chinese manufacturers have long been looking for ways to reduce the impact of tariff lists by reducing the proportion of sales to the U.S. market and thereby increasing the proportion of sales to markets outside the U.S. Although LED packaging plants with capacity outside China may benefit from the transfer effect of tariff lists, overall, if Chinese manufacturers sell their products to markets outside the United States at cheaper prices, they are also afraid of re-creating price competition, and are not positive news for manufacturers outside China. Interest.

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