The United States officially began to impose a 25% import tariff on the first batch of 818 categories and $34 billion in Chinese products at 0:01 am (12:00 Beijing time) on July 6th, Eastern Time. Goods imported from the United States are subject to tariffs. The largest trade war in economic history has officially started.
A few days ago, China and the United States made separate speeches. A spokesman for the US Trade Representative Office (USTR) said that the US Customs and Border Protection Agency has received instructions to begin tariff collection. Once the public comment period is completed, the Trump administration will impose a tariff on the additional $16 billion in Chinese exports as early as August. China’s Ministry of Commerce spokesman spoke at the press conference that China promised not to shoot the first shot, but in order to defend the country’s core interests and the interests of the people, it had to be forced to make the necessary counterattacks.
On August 14, 2017, US President Trump issued a memorandum instructing the US Trade Representative to initiate an investigation into China 301. On June 15 this year, the Office of the US Trade Representative (USTR) issued two lists of levies on special tariffs for the investigation of imported products in China. Beginning July 6, 2018, more than 800 Chinese products will be subject to an additional 25% tariff when importing into the United States.
A US trade representative will later conduct a further review of a list of approximately 300 tariff lines to determine whether additional tariffs will be imposed on these products. The two lists cover products imported from China worth about $50 billion.
Based on the list of 1,333 product plans announced in March, adjustments were made to remove 515 products with relatively low technical content, and 818 products were retained, mainly in 9 categories including inorganic chemicals, electromechanical and optoelectronic products. product. The US's intention to crack down on "Made in China 2025" was reflected in the adjusted first list, with a focus on China's electromechanical products. At the same time, the 86th product (mainly related to railway vehicles and their parts and components) was completely retained, which revealed the US concerns about China's railway construction.
The main impact sectors are: LED, PCB, laser equipment, semiconductor equipment, passive components, discrete components. The final version removed the TV plus tax in the proposed draft, but other electronic related items are still on the list.
This tariff list mainly affects the upstream chip and backlight of the LED. The domestic LED chip manufacturers export to the United States is not much, Sanan Optoelectronics' export to the United States is between 2-3%, while the other two strong, Huacan Optoelectronics and Aoyang Shunchang's export to the United States is even less There are few. At the same time, according to the statistics of LEDINSIDE, the three LED projects related to this taxation in 2017 accounted for only 5% of the industry's export output value, and the proportion of total exports to the US was even lower, only US$46 million.
In the LED industry chain, the actual export value to the US is actually downstream applications, such as lighting products 94054090, 94051000, etc., but this time is not within the scope of the tax increase.
This tariff list does not directly tax the panel. At the same time, it is worth noting that the final version of the tariff list removes the TV taxation items in the proposed draft, such as 85284925, 85287262 and so on. However, another major downstream LCD display of the panel is still subject to taxation (90138070).
The tax increase in the PCB field is mainly for the PCB and production equipment of TV sets. However, the proportion of domestic PCB manufacturers exporting to the United States is relatively low. For example, Shenghong Technology's revenue from the US is less than 1%. Overall, the impact is small. In addition, there are more items in the tariff list for PCA, the SMT industry. Since PCA is a direct downstream industry of PCBs, the PCA export business in the fields of medical equipment, voltage regulators, TVs, test instruments, etc. involved in Listing 1 will be affected, which will affect the performance of PCB companies to some extent.
The taxation items in Listing 1 are mainly PVD equipment and testing equipment. Among the products of North Huachuang, although the current export ratio of the company to the US is below the median, we can see from the side the US's vigilance and attention to the rise of Chinese semiconductor equipment manufacturers.
Listing 1 will tax the laser equipment used to produce printed circuits and metal processing. Through the first time and the Han nationality laser exchange, we learned that the proportion of Han’s laser exports to the United States is about 1%. The impact of this trade war is minimal.
This tariff list has a number of capacitors and resistors involved in passive components. At present, the leading manufacturers of passive components, such as Aihua Group, Farah Electronics, Jianghai and other exports to the United States are less than 10%. There will be some impact in the short term, but it is relatively controllable.
In this tariff list, there are more projects involving discrete devices. Among the leading domestic discrete devices, Jiejie Microelectronics and Silan Micro's exports to the US are less than 1%; Yangjie Technology's exports to the US are also less than 20%.
The 301 committee, which consists of a federal agency, has benefited from the 284 tariff codes included in the “Made in China 2025” industrial policy. These industry portfolios cover approximately $16 billion worth of products imported from China and will be further reviewed during public notifications and comments, including public hearings. After completing this process, the US Trade Representative will issue a final decision on the products in this list and determine if these products will be subject to additional tariffs.
The second list added 284 products, and further tariffs are required after further hearings and reviews. The taxation items in Listing 1 are mainly PVD equipment and testing equipment. It is reported that List 2 has supplemented this, including precision instruments and equipment. At the same time, List 2 mainly added tax increases in the fields of integrated circuits, fiber optic cables, electric vehicles and components, instrumentation, and petrochemicals.
Listing 1 does not cover integrated circuit products, and tariff list 2 includes it in the scope of taxation. But overall, the domestic IC design company's export ratio is relatively low, 25% of the tariff policy has little impact on semiconductor and panel production equipment: this list 2 has added the taxation items in list one, the semiconductor And the production equipment of the panel and its components are included.
Discrete device (diode):
Some of the discrete device products in Listing 1 are not included in the scope of taxation, and this list is supplemented. However, as analyzed above, the same impact is limited.
Therefore, although the second product list does not yet have to pay a 25% surcharge in July, after the notice and comment period, they may be subject to Section 301 and therefore apply the tariff. The timeline for the public review process related to the second checklist is still unclear, but we can expect it to be available soon. The affected parties should also be prepared to submit comments and participate in various hearings.
The US Trade Representative also pointed out that relevant entities can exclude production from the scope of these tariffs by way of application. As more detailed information about the program is released by US trade representatives, Chinese exporters should seize the opportunity to work with US importers. If a product is not produced in the US, or if production is insufficient to meet US requirements, it may be Tariff exemption.
In response to the US move, China adopted a strategy of retaliation. In March and April, respectively, two plans were published for the US 232 and 301 surveys, and the product list was also adjusted. The counter-production list issued by the State Council Tariff Commission on the night of June 16, 2018 will be in force, and tariffs will be imposed on US$50 billion worth of imported goods originating in the United States, mainly including agricultural products such as soybeans originating in the United States. A total of 545 kinds of goods such as automobiles and aquatic products. It is reported that the second list is intended to impose a 25% import tariff on 114 kinds of commodities imported from the United States, such as chemicals, medical equipment and energy products. In 2017, China imported about US$16 billion from the United States, and the final measures will take effect. Time is still uncertain.
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