What impact will the CHINA-US trade suspension of new tariffs have on the LED lighting industry?

On December 2, Xinhua News Agency released a message saying that on the evening of December 1, local time, the leaders of China and the United States reached a consensus on economic and trade issues between the two countries. The two sides decided to stop the trade restrictions such as upgrading tariffs, including not raising the existing tariff rate for each other, and not introducing new tariff-adding measures for other commodities. This means that China and the United States will not continue to impose new tariffs on goods, which means that CHINA-US trade frictions that have lasted for more than eight months have begun to turn around! What is the impact of this news on the LED lighting industry?

The stock market is rising across the board

Affected by the cessation of new tariffs by China and the United States, the Asia-Pacific market was generally higher at the beginning of the session. US stock futures stock indexes rose across the board, and major stock exchanges showed an upward trend, which is like spring for investors.

It should be noted that this time it is only a “stop new tariff”, but the previous taxation is still valid, and there is a three-month period for stopping the new tariff. Only when the two sides continue to sit down and negotiate an agreement can they advance the benefits. Otherwise, the changing US government may continue to impose new commodity taxes after the end of the three-month period.

US lighting companies have suspended price increases

Since the CHINA-US trade war, relevant companies in China and the United States have been affected to varying degrees, and LED-related companies are also taking possible countermeasures. Since May of this year, a number of lighting companies have implemented price increases on products. After China and the United States suspended mutual tariffs, the two companies announced a moratorium on price increases.

According to foreign media reports, Current announced that the price increase originally scheduled for January 1 is tentatively scheduled for April 1.

On December 5, Acuity issued a notice announcing the suspension of the price increase. The notice stated: “In November, due to the increase in the input cost of our products, including the impact of tariff increases, we announced that we will raise the price from January 2, 2019.

However, after the trade negotiations between China and the United States on December 1, the Trump administration announced that it would suspend the new tariffs during the 90-day period of the trade negotiations. Therefore, we will not proceed with the January price increase plan. All other price increase measures previously announced and implemented are fully in effect and will continue to be implemented. If the tariff is raised within 90 days, the 15% price increase we announced previously will be implemented during this time. ”

US imposes tariffs

On March 22, 2018, the White House officially signed a trade memorandum to China, announcing that it would be possible to impose tariffs on US$60 billion of goods imported from China and restrict Chinese companies from investing in the United States. On April 3, 2018, the Office of the US Trade Representative announced the list of Chinese goods subject to tariffs based on the results of the “301 Survey”, involving imports worth approximately US$50 billion annually from China. In this round of taxation, it actually involves LED upstream, PCB, passive components, discrete devices and semiconductor equipment. However, such products of Chinese companies have a small proportion of exports to the United States, so they have little impact on the industry.

On September 18, 2018, Trump instructed the US Trade Representative (USTR) to impose additional tariffs on approximately $200 billion of Chinese imports, which will take effect on September 24, 2018, 10% before the end of the year, 2019 It will increase to 25% from January 1. In the second round of the 200 billion taxation list, the LED products involved are widely covered, including more than ten kinds of LED and lighting products, and the trade amount is also relatively large. In this round of taxation, a total of 33 categories of lighting products were included in the tariff list. According to industry data, the export value of tariffed lighting products accounts for about 75% of China’s total lighting products exports, exceeding US$30 billion. Among them, exports to the US account for nearly 80% of China’s total lighting products exports to the US, exceeding 80%. One hundred million U.S. dollars. As the largest export destination of China’s lighting products, the United States has imposed a wide range of tariffs on Chinese lighting companies.