The impact of trade tax increases on export products

The impact of trade tax increases on export products:
Recently, the United States announced the imposition of tariffs on some Chinese imported goods, which has had multiple impacts on Chinese export products. The following is a specific analysis:
1. Impact on export products
Rising costs and decreasing competitiveness
Tariff increase: The United States has imposed tariffs on Chinese goods, directly leading to an increase in the cost of Chinese exports. For example, the United States imposing a 10% tariff on Chinese imports will weaken the price competitiveness of Chinese exports to the United States.
Profit compression: For small and medium-sized enterprises with low profit margins, cost pressure is particularly evident, and some orders are even transferred to low-cost regions such as Southeast Asia.
Decreased orders and shrinking market share
Market share decline: Tariff barriers have led American buyers to turn to other countries for procurement, resulting in a significant decrease in order volume for Chinese export companies. Especially for companies that rely on the US market, there is a risk of shrinking market share.
Increased business pressure: Some traditional manufacturing companies are even forced to reduce or shut down production, leading to increased employment pressure.
The pressure of supply chain adjustment is increasing
Supply chain transfer: In order to avoid tariffs, some companies have attempted to transfer their production lines to Southeast Asia or Mexico, but this process requires a significant investment of funds and time. For small and medium-sized enterprises with tight capital chains, supply chain adjustment is difficult and difficult to achieve in the short term.
Changes in trade structure
Market diversification: China is forced to adjust its trade structure and accelerate the development of other international markets. For example, China's exports to ASEAN will surpass those of the United States in 2023.
Changes in product export flow: Some products may be re exported to the United States through transit in other countries or regions, which changes the export flow of some products.
Product quality decline
Changes in Quality Competition: Studies have shown that the increase in tariffs has lowered the quality level of Chinese exports to the United States. The competitiveness of high-quality and high priced products in the US market has been weakened, while low-quality and low-priced products have gradually become dominant.
2. Industry specific impact
Tool hardware and aerial work platform
Short term impact is significant: the overall export proportion of the tool hardware sector to the United States exceeds 70%, and core enterprises such as Zhejiang Dingli's exposure to the United States is expected to be around 40%. These industries will be greatly impacted in the short term.
Semiconductor equipment and instruments
Acceleration of domestic substitution: In the field of semiconductor equipment, imports from the United States will account for about 10% of the domestic scale in 2024. Against the backdrop of increased US semiconductor sanctions against China in the past, the accelerated verification of domestic equipment has shown good substitutability in most aspects and obvious economic benefits.
In the field of instrumentation: The market size of general electrical measuring instruments in China is expected to reach 15.7 billion yuan by 2024, of which more than 80% are expected to be imported from the United States and Europe. Under the tariff policy, the economy of domestic brands is expected to improve, and the localization rate of domestic electrical measuring instruments is expected to accelerate.
Construction machinery and rail transit equipment
Benefiting from domestic demand stimulus policies: Construction machinery (with a general exposure to the United States of less than 4%), rail transit equipment (with high domestic investment) and other cyclical sectors may benefit from domestic demand stimulus policies.

3. Enterprise response strategies
1. Globalization of production capacity layout
Overseas production bases: Some companies have established production bases in Mexico, Southeast Asia, and other places to avoid the impact of tariffs.
2. Enhancement of technical barriers
High tech products: Enterprises with high-tech barriers, such as five axis machine tools, precision instruments, etc., can better cope with tariff impacts.
3. Market diversification
Emerging market expansion: Enterprises reduce their dependence on the US market by expanding into emerging markets such as Asia, Africa, and Latin America.
4. Policy support
Domestic demand market: Pay attention to domestic policy support, such as increasing infrastructure investment, to enhance the hedging ability of the domestic demand market.
4. Future prospects
1. Global supply chain restructuring
Supply chain adjustment: The imposition of tariffs by the United States will further accelerate the restructuring of the global supply chain, and China will strengthen its trade relations with countries in the global South.
Changes in trade flow: North America will gradually reduce its dependence on China; China will strengthen its trade relations with countries in the global South; The countries of the global South are increasingly consolidating their position in the global trade map.
2. Industry reshuffle accelerates
Changes in the competitive landscape: Tariff policies accelerate industry reshuffle, and competition in the machinery industry shifts from "cost-effectiveness" to "technology global capabilities" as the dominant factor.
3. Domestic substitution acceleration
Technological breakthrough: Focus on the progress of domestic substitution, such as breakthroughs in nanometer level precision of lithography machine air floating guide rails.