LED Imports from China to be hit with up to 25% Tariff

LED Imports from China to be hit with up to 25% Tariff

(Article from Viribright News     6.29.18)….

The office of the United States Trade Representative confirmed on June 15th, 2018 that the administration will be moving forward with tariffs on Chinese imports. The move follows growing trade hostilities between the US and China as the Trump administration seeks to remedy perceived “unfair” trade practices

From the long list, HS 85414020 – Light Emitting Diodes, and other lighting industry related HS codes will soon face an additional tariff enforced by the Trump administration on Chinese manufactured products. The news will shock the system of many small to mid-sized Chinese manufacturers and U.S. importers as the cost increase will severely handicap their ability to compete in the marketplace. The lighting industry has experienced a surge of new, inexpensive manufacturers seeking to capitalize on the increasing viability of LED technology in the U.S. market and many will see the tariff as ill-timed, to say the least.

An opportunity now shows itself for non-Chinese manufacturers of LED lighting and components. With a 25% cost increase, many retailers, distributors, and lighting importers may seek greener pastures in Viet Nam and Taiwan for suitable alternatives.

The rollout of the new tariff will begin on July 6th, 2018 and continue indefinitely. The discussion will be ongoing as the administration seeks commentary from the public regarding the decision.

Washington, DC – The Office of the United States Trade Representative (USTR) today released a list of products imported from China that will be subject to additional tariffs as part of the U.S. response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.

On May 29, 2018, President Trump stated that USTR shall announce by June 15 the imposition of an additional duty of 25 percent on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s “Made in China 2025” industrial policy. Today’s action comes after an exhaustive Section 301 investigation in which USTR found that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce.

“We must take strong defensive actions to protect America’s leadership in technology and innovation against the unprecedented threat posed by China’s theft of our intellectual property, the forced transfer of American technology, and its cyber attacks on our computer networks,” said Ambassador Robert Lighthizer. “China’s government is aggressively working to undermine America’s high-tech industries and our economic leadership through unfair trade practices and industrial policies like ‘Made in China 2025.’ Technology and innovation are America’s greatest economic assets and President Trump rightfully recognizes that if we want our country to have a prosperous future, we must take a stand now to uphold fair trade and protect American competitiveness.”

The list of products issued today covers 1,102 separate U.S. tariff lines valued at approximately $50 billion in 2018 trade values. This list was compiled based on extensive interagency analysis and a thorough examination of comments and testimony from interested parties. It generally focuses on products from industrial sectors that contribute to or benefit from the “Made in China 2025” industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles. The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions.

This list of products consists of two sets of U.S tariff lines. The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6. These lines cover approximately $34 billion worth of imports from China. USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees. Customs and Border Protection will begin to collect the additional duties on July 6, 2018.

The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy. These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

USTR recognizes that some U.S. companies may have an interest in importing items from China that are covered by the additional duties. Accordingly, USTR will soon provide an opportunity for the public to request the exclusion of particular products from the additional duties subject to this action. USTR will issue a notice in the Federal Register with details regarding this process within the next few weeks.

Comments from Ralph:  The Tariffs if they launch as planned will have a big impact on all Asian LED products. Obviously, some more than others depending on how and where they source and assemble products.  One thing for sure is LED fixtures and lamps will go up in price. Some of this may be good to drive out lower end companies.  In any event, FSG and I have the best quality lines and will help you navigate to use the least affected fixtures and ensure you the best value. If you have a project on hold, consider buying now to avoid any increases.  You can reach me here on this site or at ralph.grondo@fsgi.com.

 

Who’s Afraid of the Big Bad Tariffs?

Who’s Afraid of the Big Bad Tariffs?

By Diane Duenez – April 25, 2018,  LighTED

Three weeks ago, the United States Trade Representative released a list of items from China that will be impacted by the recent tariff hikes. Among them, LED lighting. lightED recently spoke with two U.S. manufacturers about possible adjustments they will have to make.

According to Jian Ni, CEO for Forest Lighting, LED lamps and luminaries offered by Forest Lighting are not included in the proposed tariff list. This means their products will not be impacted by the proposed tariffs.

However, LEDVANCE isn’t as certain they won’t face some sort of fall-out. “We are monitoring the situation and working closely with NEMA to ensure that our customers’ best interests are represented,” says Matt McCarron, Vice President of Industrial Commercial Channel. “Some components used in our SYLVANIA LED lamps produced here in the United States are included in the proposed tariffs, but these are just proposed and not a certainty.”

However, McCarron says tariff or no tariff, their LED portfolio offers distributors a unique selling point since it’s made by U.S. workers.

“Rather than wait for lamps from overseas, we can respond quicker with these products and be agiler.  Inventory issues can be minimized, and distributors can have less money tied up in inventory.  Since the products are manufactured in America with the U.S. and global parts, they qualify for BAA (COTS item) and TAA compliant projects, opening the door to more opportunities.”

The tariff isn’t slowing either company. In fact, Ni says they are not planning any changes to their current business model. He says the proposed tariffs appear to be a non-factor in the plans for rapid growth.

Both companies agree that continued conversations with the marketplace will not only improve performance but increase new product introductions.

In fact, the tariff may create opportunities. One target in particular for LEDVANCE: government contracts.

“Our distributors can count on our unique locally-produced LED portfolio to take advantage of the huge market for government contracts,” says McCarron. “As mentioned, since the products are manufactured in America with U.S. and global parts, they are uniquely qualified for BAA (COTS item) and TAA compliant projects.  A major part of the lamps is the glass from our Kentucky factory.  This advancement is not just creating more advanced U.S. factories, it is also creating a more advanced U.S. workforce.”

While prices may go up slightly from imported steel and aluminum used in most LED luminaries and lamps manufactured in the US, Ni points out that the slight increase should not be the only element of buying decision. “Performance, life, color, efficacy, and system integration and customer service ultimately make up the purchasing criteria for educated lighting buyers and users.”

Comments by Ralph:  Manufacturers will do whatever they can to minimize the effects of the tariffs. Companies like Ledvance that have some parts manufactured here will be not hurt as much. That said, much of the steel, aluminum and LED chips will be impacted which will certainly drive costs up.  If your looking to purchase fixtures and or lamps; do so now to avoid increases.  Contact me for Ledvance and other quality LED fixture and lamp company pricing. See more articles and sign up for my newsletter at click here.