"Unprecedented chaos and uncertainty!" This is how an LED industry insider described President Trump's proposed "tariff" plan!
Recently, President Trump signed an executive order to impose a 10% tariff on Chinese imports to the U.S., citing issues like fentanyl. The tariff is set to take effect on February 4, 2025, Eastern Time. Additionally, Trump proposed a "reciprocal tariff" policy, which, if fully implemented, would essentially eliminate "most-favored-nation and differential preferential policies" for all countries globally. This includes sector-specific tariffs like the 25% tariff on steel and aluminum!
The continuous swing of multiple tariff measures has thrown the U.S. market, one of the world's largest consumer markets, into chaos. For instance, there have been rollercoaster-like scenarios where tariffs on small packages under $800 were imposed and then withdrawn within a week, highlighting the current confusion around "information and trends."
For China's display industry, the impact of Trump's tariff plan is clear. For example, China supplies over 70% of the world's semiconductor display panels and 80% of LED displays. Key components and terminal enterprises in China's display industry derive 30-70% of their sales from overseas markets. The U.S., being a significant consumer of advanced display products, is characterized by high demand and high profits. Under Trump's tariffs, how to respond to the "impact of protectionism" has become a critical question.
Who Bears the Tariff Costs?
There are three typical views on who bears the increased tariff costs: consumers in the target market, suppliers from the exporting country, or intermediaries sacrificing their profits.
However, none of these views are entirely accurate. Determining who bears the tariff costs must consider the balance of power between supply and demand and distinguish between short-term and long-term impacts.
From a supply-demand perspective, China's display industry holds a clear competitive advantage. For instance, China, including both the mainland and Taiwan, dominates the global production capacity for large-size LCD panels. After Sharp's 10th-generation line in Japan shut down in 2024, China essentially monopolized the entire production capacity. In such an industry, it's challenging for suppliers to make significant concessions and absorb tariff costs.
Moreover, since 2023, panel suppliers have been stabilizing market prices and avoiding severe losses through measures like annual maintenance and capacity control. The panel industry operates on a "tight cost balance," leaving little room to absorb additional tariff costs. In fact, the global shift in industrial production has always followed the principle of moving to lower-cost regions. This limits suppliers' ability to bear extra costs, meaning consumers will ultimately shoulder most of the burden.
Historically, suppliers have responded to tax barriers by reducing capacity or relocating supply chains rather than unilaterally absorbing extra costs. However, such structural changes take time.
In the long run, tariffs will inevitably reshape the global distribution of supply chains. This aligns with the U.S. goal of bringing manufacturing back home. But for this to happen, U.S. manufacturing must be profitable. In other words, the U.S. must become a lower-cost region compared to external suppliers, requiring a significantly higher tariff barrier that outweighs the cost advantages of foreign suppliers.
However, the U.S. currently lacks such a "cost advantage" in the display industry. Thus, increased tariffs are more likely to raise U.S. product prices rather than shift supply chains domestically—a trend observed over the past eight years of U.S.-initiated trade wars.
China's display industry enjoys advantages in scale, R&D innovation, and a well-developed, high-density supply chain. Additionally, China is the world's largest consumer market for display products, providing a strong market advantage. Chinese display enterprises should confidently leverage these strengths—innovation, cost efficiency, and the domestic market—to secure a strong negotiating position in global supply chain adjustments.
For example, on February 18, Acer Chairman Jason Chen revealed in a UK interview that Acer would raise prices by 10% for products affected by U.S. tariffs, based on import timing. This means laptops (PCs) manufactured in mainland China and sold in the U.S. will see a 10% price increase. This example shows that, at least for Acer's products, U.S. consumers will bear the brunt of the tariff changes. This is a clear case of "negotiating power based on strength" determining who bears the "extra" costs.
Trumpism Shakes the Global Economic Landscape
"Will tariff barriers, driven by the U.S., become a tool for more economies?" This is another concern following the U.S.'s chaotic tariff policies!
Indeed, some U.S. allies may mimic or follow U.S. policies to show allegiance, such as Canada's alignment with U.S. strategies. Others may adopt similar measures to protect specific industries, like the EU's barriers against China's new energy vehicles.
A "Trump ripple effect" is spreading globally, creating complex impacts. Some argue that blindly following U.S. policies won't address "Trump-style" concerns. The current U.S. administration's core mission isn't resolved through superficial gestures but requires substantial economic benefits. Hence, the U.S. imposed a blanket 25% tariff on steel and aluminum, even targeting close allies like Canada.
For targeted protection of domestic industries, the premise is that "protection is necessary." This not only means the industry needs protection but also that it exists in the first place. For example, protecting the electric vehicle industry requires a developed supply chain, technology, talent, and market resources—conditions the EU possesses. In contrast, the U.S. and Europe generally lack the technological and talent base in the display industry and face stiff competition from mature external suppliers. Similarly, the U.S. tends to protect its traditional fossil fuel industry due to its vast land and marine resources, whereas Japan has no such need.
Tariffs are not an end but a means to an end—sometimes to increase revenue, sometimes as a bargaining chip, and other times as a deterrent. The widespread "reciprocal tariffs" may signal the most significant shift in U.S. political-economic theory and strategy in decades. However, tariffs are not a universal solution; their effectiveness in reshaping supply chains depends on specific market conditions. Nor are they a time machine; even if effective, they require time to adjust supply structures.
Thus, while Trump's tariff policies may have a "demonstration effect," rational decision-making and objective conditions will likely lead most economies to adopt trade strategies that align with their interests rather than blindly imitating the U.S.
Increased Risk of Global Economic Turbulence Calls for Preparedness
"Simple tariff policies are not structural or systematic tools but destructive ones!" Under Trump's tariff measures, global economic stability will inevitably face challenges, but the greater impact may be on the U.S. domestic market.
First, regardless of who bears the tariff costs, it will result in a "redistribution of costs," as U.S. customs revenue increases. In the short term, affected market players will likely respond with passive "clearing" behaviors. If consumers bear the tariffs, it will lead to reduced consumption. If suppliers bear the costs without sufficient profit margins or innovation capacity, it will result in losses and long-term capacity reduction.
Once production capacity shrinks, the market will shift to a seller's market, and tariffs will inevitably be passed on to consumers. Even if production capacity is rebuilt in the U.S. as Trump hopes, it will be based on higher domestic industrial costs, ultimately increasing consumer prices and reducing purchasing power and consumption.
Second, the U.S. market is not the only market. Its long-term strength is built on dollar globalization and trade deficits. The intent to reduce deficits through tariffs conflicts with the U.S. market's strong appeal. If reciprocal tariffs are fully implemented, the likelihood of a U.S. market downturn will significantly increase, requiring careful consideration by businesses across industries.
Expanding into broader markets, particularly in the Global South with its vast land and population, is key for China's display industry and other competitive sectors to grow and thrive. The 7 billion people outside the 1 billion in Europe and the U.S. represent the true majority market, which should benefit from a more rational and balanced global economic system and become the real rule-makers in globalization.
Third, the current global industrial distribution is the result of competition, national industrial policies, and business environments—subjective factors. But it is also the result of "market laws"—objective factors. Subjective will and actions cannot override objective laws. Market laws will always favor economies with innovation hubs, cost advantages, and large consumer bases. In this regard, China's display industry, and even industries like chips facing bottlenecks, should maintain long-term confidence.
Respecting market laws, diversifying risks, and objectively recognizing the declining global value of the U.S. market are essential mindsets to navigate this round of "American-style chaos."
Self-Reliance is the Path to Victory
Over the past 40 years, China's display industry has transformed from heavily relying on imports of core components like CRT tubes and LED screens to becoming the world's leading supplier of display devices.
What drove this change? It wasn't just a single policy or opportunity but a complex process of market upgrading, shaped by the successes and failures of thousands of enterprises across the supply chain. Seizing objective opportunities, adhering to market laws, and leveraging human initiative were all indispensable.
Today, China's display industry has never been stronger, and the objective conditions are only improving. Under these circumstances, shouldn't we further harness our initiative to achieve greater success? By overcoming Trump's tariff barriers, recognizing the vastness of the global market, embracing the opportunities of the digital era, and leveraging the power of innovation and the market's invisible hand, we can surely "ride the waves" to success!
Recently, President Trump signed an executive order to impose a 10% tariff on Chinese imports to the U.S., citing issues like fentanyl. The tariff is set to take effect on February 4, 2025, Eastern Time. Additionally, Trump proposed a "reciprocal tariff" policy, which, if fully implemented, would essentially eliminate "most-favored-nation and differential preferential policies" for all countries globally. This includes sector-specific tariffs like the 25% tariff on steel and aluminum!
The continuous swing of multiple tariff measures has thrown the U.S. market, one of the world's largest consumer markets, into chaos. For instance, there have been rollercoaster-like scenarios where tariffs on small packages under $800 were imposed and then withdrawn within a week, highlighting the current confusion around "information and trends."
For China's display industry, the impact of Trump's tariff plan is clear. For example, China supplies over 70% of the world's semiconductor display panels and 80% of LED displays. Key components and terminal enterprises in China's display industry derive 30-70% of their sales from overseas markets. The U.S., being a significant consumer of advanced display products, is characterized by high demand and high profits. Under Trump's tariffs, how to respond to the "impact of protectionism" has become a critical question.
Who Bears the Tariff Costs?
There are three typical views on who bears the increased tariff costs: consumers in the target market, suppliers from the exporting country, or intermediaries sacrificing their profits.
However, none of these views are entirely accurate. Determining who bears the tariff costs must consider the balance of power between supply and demand and distinguish between short-term and long-term impacts.
From a supply-demand perspective, China's display industry holds a clear competitive advantage. For instance, China, including both the mainland and Taiwan, dominates the global production capacity for large-size LCD panels. After Sharp's 10th-generation line in Japan shut down in 2024, China essentially monopolized the entire production capacity. In such an industry, it's challenging for suppliers to make significant concessions and absorb tariff costs.
Moreover, since 2023, panel suppliers have been stabilizing market prices and avoiding severe losses through measures like annual maintenance and capacity control. The panel industry operates on a "tight cost balance," leaving little room to absorb additional tariff costs. In fact, the global shift in industrial production has always followed the principle of moving to lower-cost regions. This limits suppliers' ability to bear extra costs, meaning consumers will ultimately shoulder most of the burden.
Historically, suppliers have responded to tax barriers by reducing capacity or relocating supply chains rather than unilaterally absorbing extra costs. However, such structural changes take time.
In the long run, tariffs will inevitably reshape the global distribution of supply chains. This aligns with the U.S. goal of bringing manufacturing back home. But for this to happen, U.S. manufacturing must be profitable. In other words, the U.S. must become a lower-cost region compared to external suppliers, requiring a significantly higher tariff barrier that outweighs the cost advantages of foreign suppliers.
However, the U.S. currently lacks such a "cost advantage" in the display industry. Thus, increased tariffs are more likely to raise U.S. product prices rather than shift supply chains domestically—a trend observed over the past eight years of U.S.-initiated trade wars.
China's display industry enjoys advantages in scale, R&D innovation, and a well-developed, high-density supply chain. Additionally, China is the world's largest consumer market for display products, providing a strong market advantage. Chinese display enterprises should confidently leverage these strengths—innovation, cost efficiency, and the domestic market—to secure a strong negotiating position in global supply chain adjustments.
For example, on February 18, Acer Chairman Jason Chen revealed in a UK interview that Acer would raise prices by 10% for products affected by U.S. tariffs, based on import timing. This means laptops (PCs) manufactured in mainland China and sold in the U.S. will see a 10% price increase. This example shows that, at least for Acer's products, U.S. consumers will bear the brunt of the tariff changes. This is a clear case of "negotiating power based on strength" determining who bears the "extra" costs.
Trumpism Shakes the Global Economic Landscape
"Will tariff barriers, driven by the U.S., become a tool for more economies?" This is another concern following the U.S.'s chaotic tariff policies!
Indeed, some U.S. allies may mimic or follow U.S. policies to show allegiance, such as Canada's alignment with U.S. strategies. Others may adopt similar measures to protect specific industries, like the EU's barriers against China's new energy vehicles.
A "Trump ripple effect" is spreading globally, creating complex impacts. Some argue that blindly following U.S. policies won't address "Trump-style" concerns. The current U.S. administration's core mission isn't resolved through superficial gestures but requires substantial economic benefits. Hence, the U.S. imposed a blanket 25% tariff on steel and aluminum, even targeting close allies like Canada.
For targeted protection of domestic industries, the premise is that "protection is necessary." This not only means the industry needs protection but also that it exists in the first place. For example, protecting the electric vehicle industry requires a developed supply chain, technology, talent, and market resources—conditions the EU possesses. In contrast, the U.S. and Europe generally lack the technological and talent base in the display industry and face stiff competition from mature external suppliers. Similarly, the U.S. tends to protect its traditional fossil fuel industry due to its vast land and marine resources, whereas Japan has no such need.
Tariffs are not an end but a means to an end—sometimes to increase revenue, sometimes as a bargaining chip, and other times as a deterrent. The widespread "reciprocal tariffs" may signal the most significant shift in U.S. political-economic theory and strategy in decades. However, tariffs are not a universal solution; their effectiveness in reshaping supply chains depends on specific market conditions. Nor are they a time machine; even if effective, they require time to adjust supply structures.
Thus, while Trump's tariff policies may have a "demonstration effect," rational decision-making and objective conditions will likely lead most economies to adopt trade strategies that align with their interests rather than blindly imitating the U.S.
Increased Risk of Global Economic Turbulence Calls for Preparedness
"Simple tariff policies are not structural or systematic tools but destructive ones!" Under Trump's tariff measures, global economic stability will inevitably face challenges, but the greater impact may be on the U.S. domestic market.
First, regardless of who bears the tariff costs, it will result in a "redistribution of costs," as U.S. customs revenue increases. In the short term, affected market players will likely respond with passive "clearing" behaviors. If consumers bear the tariffs, it will lead to reduced consumption. If suppliers bear the costs without sufficient profit margins or innovation capacity, it will result in losses and long-term capacity reduction.
Once production capacity shrinks, the market will shift to a seller's market, and tariffs will inevitably be passed on to consumers. Even if production capacity is rebuilt in the U.S. as Trump hopes, it will be based on higher domestic industrial costs, ultimately increasing consumer prices and reducing purchasing power and consumption.
Second, the U.S. market is not the only market. Its long-term strength is built on dollar globalization and trade deficits. The intent to reduce deficits through tariffs conflicts with the U.S. market's strong appeal. If reciprocal tariffs are fully implemented, the likelihood of a U.S. market downturn will significantly increase, requiring careful consideration by businesses across industries.
Expanding into broader markets, particularly in the Global South with its vast land and population, is key for China's display industry and other competitive sectors to grow and thrive. The 7 billion people outside the 1 billion in Europe and the U.S. represent the true majority market, which should benefit from a more rational and balanced global economic system and become the real rule-makers in globalization.
Third, the current global industrial distribution is the result of competition, national industrial policies, and business environments—subjective factors. But it is also the result of "market laws"—objective factors. Subjective will and actions cannot override objective laws. Market laws will always favor economies with innovation hubs, cost advantages, and large consumer bases. In this regard, China's display industry, and even industries like chips facing bottlenecks, should maintain long-term confidence.
Respecting market laws, diversifying risks, and objectively recognizing the declining global value of the U.S. market are essential mindsets to navigate this round of "American-style chaos."
Self-Reliance is the Path to Victory
Over the past 40 years, China's display industry has transformed from heavily relying on imports of core components like CRT tubes and LED screens to becoming the world's leading supplier of display devices.
What drove this change? It wasn't just a single policy or opportunity but a complex process of market upgrading, shaped by the successes and failures of thousands of enterprises across the supply chain. Seizing objective opportunities, adhering to market laws, and leveraging human initiative were all indispensable.
Today, China's display industry has never been stronger, and the objective conditions are only improving. Under these circumstances, shouldn't we further harness our initiative to achieve greater success? By overcoming Trump's tariff barriers, recognizing the vastness of the global market, embracing the opportunities of the digital era, and leveraging the power of innovation and the market's invisible hand, we can surely "ride the waves" to success!
