How will the LED industry be affected by the US tariff increase?
The US-China trade war continues to heat up, and the United States announced that it will use Section 301 again to impose a 10% tariff on China’s approximately $200 billion in goods. Among them, LED and some lighting products are also included in the target product list, starting in September. The levy, triggered by the expansion of the scope of the LED industry.
Despite the gradual recovery of market demand in the third quarter, the spread of the US-China tariff war has cast a shadow over the overall market conditions of LED lighting, especially the decorative, high-priced special lighting products will bear the brunt.
The United States has offered the latest wave of retaliatory tariffs, including Sanan Optoelectronics, Huacan Optoelectronics, Mulinsen, Foshan Lighting, etc. The stock prices have fluctuated, which has obviously impacted market confidence. Since September, tariffs will be imposed. In order to avoid risks, customers have deferred the time-consuming process, first to change the inventory support, LED industry shipments are blocked, in the second half of 2018 LED lighting market conditions will not be prosperous.
According to Jingdian, due to the uncertainty of tariffs imposed by the United States, the demand for orders from LED lighting terminal customers has turned conservative. Compared with 2017, LED lighting accounted for about 45% of revenue, and the proportion in the first half of 2018 dropped. Up to about 35%, despite entering the traditional season of the third season, LED backlight demand began to warm up, but recently LED lighting is still dominated by short orders, only LED filament lamps, high-performance lamps and other requirements are more clear, it is expected that LEDs for the whole year Lighting revenue may fall by 30% or less.
The industry expects that the United States will inevitably hit the market to buy gas in the short term, especially the average gross profit margin of LED lighting is low. Once the 10% tariff is increased, the dilution of the manufacturer will seriously affect the profit, and even the LED lighting supply chain manufacturing sector will be moved. In the future, some lighting companies may consider establishing an automated production line in the United States.
The LED industry pointed out that the expansion of the US tariff turmoil will inevitably affect the overall LED industry. However, the operating conditions of individual companies are different. Some operators focus on the mainland market, while some operators have overseas manufacturing bases, such as Mulinsen's Ledvance brand layout. Under the foundation, the production line has been set up in the United States or Mexico, and the production scale will be moderately increased in the future.
Industry experts have estimated that the LED bulbs or filament lamps that are currently the largest in the market are not included, and the general lighting application is a necessity for the people's livelihood. The market impact should be limited, but the LEDs will enter the peak of shipment in the second half of the year. Christmas lights, art lights or art lights with higher product prices will be greatly affected.
The U.S.-China tariff trade war is overshadowed. In April, the list of the first wave of tariffs imposed on the 25% tariff was limited to the import of LED component products to the United States. Among them, some of the LED components of Lite-On are facing tariff increases, but LED components account for about 14-15% of the total revenue, and LED factories in Thailand have limited short-term impact.
Due to the limited impact of the first wave of taxation on industrial intermediates, exports to the US in 2017 were less than $200 million, but the second wave of $200 billion in tariffs covered a wide range of LED products, except for incandescent light sources (HS). Codes: 853922 and 853929, etc. and LED replacement light sources (HS code) and other products, covering most of the lighting industry related products. The export value of these products accounts for about 75% of China's total lighting products exports, exceeding US$30 billion; of which exports to the US account for nearly 80% of China's total lighting products exports to the US, exceeding US$8 billion. The subsequent impact effects will be very large.
The United States and China have previously increased tariffs on each other for $34 billion in imported goods. US President Trump has once again announced a $200 billion tariff list for goods, which will be reviewed on August 20-23. According to the announcement of the Office of the US Trade Representative, the new round of listings will enter the solicitation period after the announcement, and the actual taxation decision will be made after August 31.
The Chinese Ministry of Commerce publicly expressed dissatisfaction. On the 11th, it issued a statement on the new round of the list, saying that it was "shocked" by the US to announce the tax collection list in an accelerated way, and said that the Chinese government will, as always, have to make the necessary counter-measures. One day later, the Ministry of Commerce once again issued a statement reaffirming that the United States has disregarded China’s unfair trade practices and China’s disregard of disagreements. The United States’ unilaterally launched trade war “has no international legal basisâ€.
The confrontation between the two sides has become increasingly fierce. The industry is worried that the future will announce more tariff lists, hit the terminal market to buy gas, and detonate LED industry mines. However, the news said that the US Trade Representative Office will adjust the list according to whether it harms the interests of US consumers. The final implementation of the list is still uncertain. Therefore, some people believe that the tax increase list has not finally landed, or there is room for manoeuvre.
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