What is the impact on the LED industry by imposing a 25% tariff on China’s $200 billion in goods?

On May 8th, Beijing time, after the US Dow Jones index plunged nearly 500 points the night before, the US Trade Representative Office (USTR) issued a statement announcing that the US will raise the tariff of 200 billion US dollars of Chinese goods from 10% on May 10. Up to 25%.

In this regard, the Chinese side indicated that the US intends to raise the tariff of 200 billion US dollars of Chinese exports to the United States from 10% to 25% on May 10. The escalation of trade friction is not in the interests of the people of the two countries and the people of the world. The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures.

On July 10, 2018, the Office of the US Trade Representative issued a statement that the Trump administration issued a plan to increase tariffs on China’s $200 billion in goods. In this statement, LED products are impressive.

The Trump administration’s taxation project announced in July last year covered a wide range of LED products, including more than a dozen items in the LED lighting category. These products account for 75% of China’s total exports of lighting products. In 2017, China’s exports to the United States, the main lighting products, reached more than US$5 billion. Further details on the enforcement of additional tariffs have not yet been announced, but since the United States has always been an important export market for LED lighting products in China, the impact of tariffs on lighting products will be inevitable.

Currently, more than 85% of LED lighting products are manufactured and assembled in China. Although many LED lighting companies have production facilities outside China, their output is not enough to meet the needs of the US market. Therefore, the additional cost of this tariff may be reflected in the form of higher fees for US consumers.

In the long run, LED producers with capacity in Taiwan or Southeast Asia may benefit because they can transfer orders to where to avoid tariffs. For those non-Chinese LED manufacturers, as Chinese companies sell lighting products to the US will gradually reduce and shift the rest of the products to other non-US markets, they may continue to face low-price competition, while lower prices will be for LEDs. The price of lighting products has a serious impact.