Effects of Trade Restrictions on LED industry

The tariff imposed on Chinese imported products to the U.S. is effective today, on July 6th. Previously the U.S. government has announced that the U.S. will enforce 25 percent tariffs on 818 Chinese goods which are in total worth about US$34 billion. The whole world is now focusing on the impacts of the trade restrictions on the industry. As LEDs is also in the list, LEDinside has disclosed the possible impacts on LED companies in China and Taiwan and now will share some updates in the LED industry related to the trade conflict.

Trump’s act of imposing tariff was to reduce the reliability of U.S. companies on intermediate goods from China and to increase the competitiveness of products produced within the U.S. However, for Cree, the American LED giant, the 25 percent tariff will affect its components and products manufactured in its facility in China. It means that it will cost more for Cree to produce LED products with end-application while the company still needs to compete with products made in countries other than China.

(Image: Cree)

Therefore, for U.S. manufacturers of LED end-products, the competition within the country might be even fiercer since the tariff applies mainly to intermediate LED goods which will increase their production cost. Meanwhile, Chinese exported LED products with end-applications such as lighting products and displays will still be competitive in the U.S. market as those are not on the tariff list.

The trade restrictions also influenced European firms such as Osram who recently adjusted its business outlook of the year as Trump also threatened to apply tariff on products from the EU. As a result, companies based in countries other than China and Europe with their production capacity also in other countries might benefit from the trade conflicts.

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