Trade War with China Means Rising Cost of Lights

As the trade war between the United States and China intensifies, lights businesses are feeling the effects, as are their customers. The rising costs of importing LED products are forcing lights manufacturers and lights resellers to raise prices.

In April of 2018, the Trump administration published a list of 1,300 Chinese exports that would be taxed 25 percent following a Section 301 investigation. In July of that year, Trump announced more tariffs would be put into effect on nearly $200 billion worth of Chinese products. One item that appears on both lists? LEDs.

The government began imposing the tariffs in July of 2018, and since the tariffs were put in place the U.S. based companies that purchase from and manufacture LED products in China have felt the effects. These companies mainly purchased LEDs to be used in wafers and backlighting, but the US government ramped up the trade war by placing even more tariffs on Chinese goods, including ten categories of products featuring LED lighting.

These LED lighting products make up approximately 75 percent of China’s lighting exports, so the tariffs will have a major impact on the Chinese lighting economy. But they have also started to impact the U.S. lighting economy, and its shareholders.

Cree, a United States-based lighting company that relies heavily on LED products for their business, has estimated that the tariffs will decrease its earnings per share by nearly two percent during 2019.

In order to offset the costs of exporting LED products from other countries, or manufacturing the products in the U.S., companies have raised prices on many lighting items. This is bad news for consumers, but good news for LED manufacturers based in Mexico and Asian countries other than China, as they will see a boost in sales as resellers turn to them while tariffs remain in place.

CEO of Sirennet, Stuart McLoughlin, said the tariffs have already impacted prices of the LED products he sells.

“Prices rose the first part of 2019 and we are now getting strong indications from factories that prices will continue to rise,” he said. “Overall, we could see a thirty percent price rise by August.”