The impact of the US trade war on China's LED lighting industry
Published Time:
2021-08-03
Following the US government's imposition of a 25% retaliatory tariff on $34 billion worth of Chinese imports on July 6th, the Trump administration released a list on July 10th proposing a 10% tariff on an additional $200 billion in Chinese goods. There is a possibility of further escalation of the trade war.
Following the US government's imposition of a 25% retaliatory tariff on US$34 billion worth of Chinese imports on July 6th, the Trump administration released another target list on July 10th, announcing a 10% tariff on an additional US$200 billion worth of Chinese goods. The possibility of an escalation in the trade war exists.
In 2017, China's lighting industry exported a total of US$40.88 billion, of which approximately US$10 billion were lighting products exported to the United States, accounting for 24.5% of the industry's total exports. The White House's new target list includes 30 subcategories of products from nine major categories within China's lighting industry, covering 67% of all categories exported to the US and approximately 82% of the value.
The majority of products in this new US government target list are traditional lighting products, such as various halogen tungsten lamps, hot cathode fluorescent lamps, high-intensity gas discharge lamps, ballasts for discharge lamps, lamp accessories, and various lighting fixtures. Only some products in the lighting fixture category (such as chandeliers and ceiling fixtures, table lamps and bedside lamps, and Christmas lights) include some LED lighting products.
Over a decade ago, under the guidance of the government and industry organizations, Chinese lighting manufacturers implemented new lighting technology development and product upgrades. As some enterprises still possess the capacity to produce traditional lighting products, some manufacturers are capitalizing on the remaining market for these products in North America. Therefore, the export of such products to the US still accounts for a significant quantity and proportion. For example, halogen tungsten lamps and energy-saving lamps have been popular electric light sources among American consumers. While the EU market will largely phase out halogen tungsten lamps after 2018, the US market, although expected to decline, shows no significant decrease in current demand. Energy-saving lamps are widely used in the US market, and have long been the preferred choice for American households seeking energy-efficient lighting. It is foreseeable that once the new US government's target list is implemented, many American consumers will either pay more to maintain their consumption habits or change their consumption habits and opt for alternatives.
China is currently the world's largest producer and exporter of lighting products. With technological advancements, equipment upgrades, and product innovation, Chinese lighting products offer not only good value but also improved variety and quality. In recent years, the number of various LED lighting products exported from China to the US has rapidly increased, particularly LED bulbs, filament lamps, PAR lamps, downlights, tube lights, panel lights, and other replacement light sources and lighting fixtures. Many enterprises (especially large and medium-sized enterprises) have largely completed the transition from traditional lighting to LED lighting product production. Due to the easy procurement of components and raw materials, complete industrial chain support, and a large number of skilled workers, China's lighting industry is expected to maintain a significant competitive advantage in the international market. However, any escalation of the trade war will put new pressure on market competition and exports.
Given the distinctive and complementary characteristics of the industries and markets in China and the US, exporting companies hope for mutual benefit in both markets under a stable exchange rate. However, in the face of the unpredictable policies of the Trump administration, Chinese lighting manufacturers will have various options and preparations. On the one hand, they are focusing on the Chinese government's Belt and Road Initiative, expanding their export horizons, and increasing efforts to develop new markets along the Belt and Road. On the other hand, they are adjusting their market focus, adapting to the improvements in the national economy and people's living standards, and shifting to supply the domestic market; in particular, in response to the central government's call for western development and targeted poverty alleviation, they will utilize effective funds and policies to build their brands and cultivate sales channels in China's new rural areas and emerging towns, seizing the opportunities for domestic market development.
(Author: Liu Shengping, China Lighting Electrical Appliances Association)
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