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what a trade war with china looks like on the front lines

by:CHZ     2020-03-27
Factories that make electric lights for Malaysia
This is an opportunity.
This is a threat for us off-board engine manufacturers.
For the biggest seller of the apartment
TV screen is a problem.
The ongoing trade war between the United States and China has triggered serious predictions of economic and geopolitical turmoil.
But for any particular industry, the impact of tariffs depends on the micro-economics of its products: How much will demand change when prices rise?
Are alternatives available at any time?
How much additional production capacity is available around the world, and how long does it take for new manufacturing facilities to be up and running?
Daniel Rosen, a partner at Rhodium Group, an economic research firm, said: \"How this will play is special for any particular product and unique for every supply chain . \".
\"No one can honestly have high confidence in their understanding of the overall impact.
You can also predict the weather on Tuesday afternoon a year later.
\"The United States imposed its first wave of tariffs this spring, and each of the 1,102 items that could be affected will have its own list of winners and losers.
To find out how this might evolve, it would be helpful to check the different trade patterns of these goods and some of the thousands of comment letters submitted by companies and industry groups to the United StatesS.
Trade Representative.
Executives and other experts have their own understanding of the repositioning of the supply chain and the price fluctuations of specific commodities.
The lesson that comes up is: be skeptical about short-term predictions of radical disruption in major industries.
For now, companies can choose to avoid some of the most serious risks.
But the longer the trade dispute lasts, the more products there will be.
The United States finds itself inconsistent not only with another major economy, but with the world as a whole, and the more meaningful it is to worry about it.
The workaround that the company is using so far will not be successful in an open environment
The trade war is over indefinitely.
China holds second place in the world
The largest economy is the main supplier of shelf products in many stores in the United States.
The Trump administration\'s first round of tariffs is designed to focus on goods with many other suppliers.
About half of US imports from China are less than 10%. Based on a new analysis of government data from affected product sources by the Peterson Institute for International Economics.
This number is higher for some products with a large share of imports, so if you use a weighted average, China has a market share of 23%.
In any case, these are not the monopoly market in China, nor any market close to China. Consider light-
LEDs are tiny components that make LED bulbs glow and are used in many industrial environments.
Last year, the United States imported $0. 637 billion worth of agricultural products from China, more than any other country.
But that doesn\'t mean China is the only supplier.
Japan and Malaysia exported a total of US $0. 593 billion of LEDs in the United States.
Therefore, for US companies that import diodes and incorporate them into their products, such as solar energy-
China is not the only choice.
The question is whether other countries that do not impose 25% tariffs will be able to adapt to the potential surge in demand.
The LED industry in Malaysia feels the opportunity.
\"The trade war, I would say, would be good for us if it really continued to move in the direction of tariffs,\" said Daniel Fang, senior regional manager for lighting and electricity overseas, 40 minutes from Kuala Lumpur. “The U. S.
The market is cutting off all ties with China, and in that sense we have a greater opportunity to benefit the United StatesS.
Malaysia market-made products.
Jamie Fox, lighting component analyst at IHS Markit, said: \"The lighting industry in Malaysia has been struggling to make progress in the US market, in part because China subsidized its LED industry.
The key machines needed to make the diodes could cost $2 million, but China\'s regional subsidies put them at half the price, putting competitors outside of China at a price disadvantage.
If tariffs reduce the competitive power of Chinese exporters, the balance may change.
John See, ceo of QAV Technologies, said his company\'s two LED factories in Penang could quickly increase production by 300 to 400% if there is demand.
He believes that Malaysia may no longer need to play a \"secondary role\" in China when doing business with the United States \".
American importers can easily replace LED products in China with LED products produced elsewhere, as these parts are relatively standard;
The main problem is price and availability.
However, other Chinese products covered by tariffs are not easy to replace for importers.
Lightning outdoor platform in coral corner of Florida.
Import its power head-
Motor that turns the propeller for the boat-from China.
Turning to different suppliers is not a trivial matter.
\"Have I tried different companies to get different cars?
Joy Hurley, business manager at Ray Electric, said.
\"Yes, but it\'s not that easy to get.
There is nothing else in our system that works.
\"The company has produced molds that are suitable for the products of the company\'s current suppliers and it will cost thousands of dollars to replace them.
\"My car as an option in the US is not suitable for our housing,\" she said. Hurley said.
At the same time, the company\'s profit margin is too low to absorb the cost of 25% tariffs.
In the short term, she said, the company needs to raise prices to pass taxes on to customers.
The US boat industry has complained about many factors in tariffs.
For example, Mercury Marine life in Fond du Lac of Wis.
In a letter to the United StatesS.
It employs 4,800 American workers but makes 40-to-60-
The horsepower marine engine in Suzhou, China is very important for enterprises.
Nicole Vasilaros, senior vice president of the National Association of Marine Manufacturers, said: \"It is difficult for some of these companies to fully absorb these costs . \".
The motor is a tariff faced by a frequently used 300 boat accessory, she said, adding together could mean a $2,000 price increase in a month-to 16-
Foot support ships with a general cost of less than five digits.
Because ships are usually purchased for recreational purposes, their needs are often resilient.
Respond quickly to price changes.
This means that these higher prices are likely to translate into less people enjoying the summer on a new motorboat.
The Trump administration\'s tariff list this month includes outboard engine and LEDs.
There are some things to learn from never being a product. Flat-
Screen TV was spared after weeks of competition in the earlier target product list.
But the supply chain of these devices clarifies the choice of all types of companies on China\'s tariff issue, and the trade war on all fronts poses a greater risk to American consumers than to consumers who only focus on China.
If the dispute with China escalates and TV becomes a target again, it will become particularly relevant --
This seems more likely in recent days.
The manufacture of LCD TV is carried out in several steps.
The liquid crystal is manufactured by complex factories, which cost billions of dollars to build.
These displays are then combined with other components to make the backlight assembly, that is, the internal structure of the TV.
The last step is the simplest and most labor-saving --
Dense: pack the backlight assembly with other parts such as speakers and buttons into the plastic housing of the TV and put it all in a box in order to ship it to the store shelves.
The LCD is mainly made in Japan, Korea, Taiwan and China.
Final assembly in more places;
Many large TVs sold in the United States are assembled in Mexico.
This shows the savvy company --
TV giants like LG, Sony and Samsung are-
China\'s tariff tightening can be avoided.
Moving more of their rallies to Mexico allows them to avoid taxes even if taxes are extended to include their products.
LG, for example, has a factory in Renault, Mexico.
Bob O\'Brien, president of the display supply chain consultancy, said he suspected the company might expand production in China and shift assembly work from China.
\"It will be disruptive in the sense that they have to change the plan, but they can hire more people in Renesas and add extra shifts, perhaps it is relatively easy to change the production line \"sir. O’Brien said.
Even if the company needs to open up new production lines, it will be enough for about six months.
Imagine a similar effort in the TV manufacturing industry where you can see the labor force
Intensive assembly may change if China implements tariffs, even with the highest tariffs
The technical part of TV remains the same.
The good news is that the strategy will exempt US consumers from 25% of taxes.
The bad news is that punishing China and forcing it to negotiate a broader US complaint won\'t help much.
In addition, the strategy of transferring TV programs from China to Mexico will be a way to avoid any Chinese tariffs, as long as the North American Free Trade Agreement maintains US import taxes from Mexico --free.
This shows that the Trump administration has one of the risks in its strategy of launching a trade war on multiple fronts.
Only one country
Even a big country like China
In the face of punitive tariffs, enterprises can find ways to reduce the damage to their own profits and consumers.
But if the United States raises tariffs on most parts of the world at the same time, corporate strategists have little room for maneuver.
Mary cutie, a senior non-resident researcher at the Peterson Institute for International Economics, said: \"The company will try to find ways to reduce the cost of trade barriers . \".
\"If you deprive them of all their options, it will be even more detrimental for American companies and American workers.
\"In other words, the impact of the first wave of Chinese tariffs may be controllable, although the impact of different products will vary for various reasons.
Unlike trade wars around the world.
Alexandra Stevenson reports in Guan Dan, Malaysia.
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