The United States will impose tariffs on China LED products or will suffer from it

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The United States will impose tariffs on China LED products or will suffer from it

Reading guide: Trump government in July announced a tax project involving a wide range of  China LED bulbs products, including LED lighting category up to more than 10 items. These products account for 75% of China’s total exports of lighting products. In 2017, China’s major lighting products exported to the United States amounted to more than $5 billion.

In April 2018, the U.S. government issued a list of 1,300 tariffs on Chinese products, and the U.S. Trade Representative proposed an additional 25% tariff on the list of Chinese products. On July 10, the U.S. Trade Representative’s office issued a statement in which the Trump administration announced a plan to increase tariffs on $200 billion of Chinese goods.

In the above two tariff life, China LED bulbs products are impressively listed.

The first round of tariff measures for goods exported to China by the United States was launched in July 6th. According to the relevant information, the first list of LED products included mainly some intermediate products including wafer and backlight products.

This tariff will undoubtedly cost American companies whose factories are set up in the United States but have to buy intermediate products from China to make them. Lighting products are mainly terminal products, and the impact on the price of LED lighting products is not obvious.

The Trump government’s tax program in July covered a wide range of China LED bulbs products, including more than a dozen LED lighting items. These products account for 75% of China’s total exports of lighting products. In 2017, China’s major lighting products exported to the United States amounted to more than $5 billion.

 

Further details of the extra tariff enforcement have yet to be released, but since the United States has been an important export market for Chinese-made LED lighting products, the impact of tariffs on lighting products will be inevitable.

For Cree, the U.S. -based LED giant, the company has announced how it is assessing the impact of tariff reductions. At the same time, the company expects earnings per share will fall by 2% in fiscal year 2019 due to tariff measures.

Eaton, another U.S. -based lighting company, said it would produce and sell related products in the same region and would take pricing measures to offset the impact of tariffs on its business.

At present, 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 U.S. market.

As a result, the extra cost of this tariff may be in the form of higher costs for American consumers.

In the long run, LED manufacturers with capacity in Taiwan or Southeast Asia may benefit because they can move orders to where to avoid tariffs.

For non-China LED manufacturers, as Chinese companies sell fewer and fewer lighting products to the U.S. and divert the rest to other non-U.S. markets, they may continue to face low-cost competition, and lower prices will have a serious impact on the price of China LED bulbs products.