Trump's re-election as president, what impact does it have on China's LED display foreign trade?

On November 6, local time, Trump was re-elected as president of the United States, which aroused widespread attention and discussion around the world. This political change not only has a profound impact on US domestic policy, but also brings many new challenges and opportunities to Chinese manufacturing companies. During his time in office, Trump pursued a series of protectionist policies and imposed high tariffs on Chinese goods, triggering a fierce confrontation in the trade war between China and the United States. After winning this election, what new changes will Chinese manufacturing enterprises face in international trade? In particular, what specific impacts will LED display companies have on their way to sea?

Tariffs have increased and profit margins have been compressed

On the afternoon of November 6, Beijing time, US Republican presidential candidate Trump announced his victory in the 2024 presidential election. Trump's re-entry into the White House will have a new round of impact on the global economic landscape, and the relationship between China and the United States is bound to become more complicated. 

During Trump's first term, it was because of Trump's aggressive trade war against China that the relationship between China and the United States took a sharp turn for the worse. This year, Trump has publicly stated on many occasions that if he is elected president of the United States, he will immediately impose higher tariffs on Chinese goods.

According to the calculation of CITIC Securities, once Trump's plan to impose 60% tariffs on Chinese goods is implemented, China's exports to the United States may fall by 16%, dragging down China's overall export growth rate by 2.3 percentage points, or 80 billion US dollars. High tariffs will directly lead to the extreme compression of corporate product profit margins.

The U.S. market has always been a nugget for Chinese LED companies. According to the data of the General Administration of Customs, the export value of China's LED display in 2023 will be 10,254,318,300 yuan. From the perspective of export destinations, the top 10 countries or regions in China's LED display export value in 2023 are the United States, Hong Kong, China, Russia, Singapore, Malaysia, South Korea, India, Brazil, Japan and Vietnam.

In the North American market, the quality requirements of LED display products are extremely strict, in the face of high tariffs, if China's LED display products lose the advantage of price competition, they will be suppressed by North American local enterprises.

Market uncertainty brought about by Trump's presidency

In 2023, Trump proposed on his campaign website to develop a "Strategic National Manufacturing Initiative (SNMI)" in the future, promoting "bringing manufacturing back to America." Due to its hype about the return of manufacturing, it will further accelerate the process of "de-globalization".

The reshoring of U.S. manufacturing is not a singular corporate act, and will lead to a large number of suppliers turning to countries such as Vietnam and India. At the same time, the United States has been at the high end of the industrial chain for a long time, and the core technology of its manufacturing industry will be strictly protected, which is not conducive to the stable development of China's manufacturing industry and accelerates the direct competition of the Chinese and American manufacturing industries in the world.

In the 2024 U.S. presidential campaign, Trump continues to hype up "anti-China" to boost his approval ratings. From proclaiming China's "forced labor" and banning the use of Chinese products, to continuing to hype up China's "overcapacity", the United States has continuously smeared China and distorted China's industrial development policies in the international community, so as to force multinational companies to ban some Chinese products and restrict the circulation of Chinese products with strong international competitiveness in the global market.

During his last administration, Trump often withdrew from international organizations and led the establishment of new organizations that served his own interests, ignoring the mature and reasonable system of rules for international trade, and seriously undermining the global free trade system. If Trump is re-elected president, he will be tougher on issues related to the international economy and trade with the aim of returning the United States to a "big producer", and any country will likely be affected.

The coping strategy of China's LED display industry

Judging from the past four years, it is clear that Biden's China policy is also not friendly. In the Biden era, Sino-US relations have not only not warmed, but also implemented an unprecedented "neck" strategy against China in the field of science and technology, and China and the United States have rapidly decoupled from the field of science and technology.

China has made remarkable achievements in the field of LED, not only the product sales occupy the majority of the global market, but also in technology research and development, especially in the field of silicon-based micro display, micro LED, printed display and other fields have shown strong strength. However, with the intensification of international competition, the United States has begun to impose targeted restrictions on Chinese companies.

On September 24, 2024, John Mulenal, chairman of the U.S. House of Representatives Select Committee on U.S.-China Strategic Competition, sent a letter to Secretary of Defense Lloyd Austin, stating that he was concerned about the growth of Chinese display companies BOE and Shenzhen Tianma, which he considered to pose a serious threat to the U.S. economy and national security. He asked the Pentagon to include BOE and Shenzhen Tianma as Chinese military enterprises on the US Department of Defense blacklist (1260H list).

In this regard, BOE and Shenzhen Tianma have responded, saying that the company has always strictly abided by relevant laws and regulations at home and abroad, and has not been informed of or received any official information about being sanctioned by the United States.

In today's deepening globalization, it is difficult for any country to completely break away from the international supply chain and develop independently. Restricting the development of Chinese companies through blacklists and other means may not only harm the economic interests of the United States itself, but also detrimental to the stability of global supply chains. Chinese companies have the ability and confidence to continue to move forward steadily in the global market. 

The tightening of relevant policies in the United States also means that the future upgrading of the domestic high-end manufacturing industry will be more dependent on domestic alternative technologies. China's LED industry needs to adopt a proactive response strategy. First of all, strengthening independent R&D and innovation capabilities is the key, and by increasing R&D investment, we will promote the accelerated penetration of emerging application fields, especially in the field of new generation MLED technology, so as to improve the technical content and market competitiveness of products.

On the other hand, Chinese LED companies need to actively explore new markets and reduce their dependence on the U.S. market. The Belt and Road Initiative, African cooperation, South American development, BRICS cooperation, etc. are all market directions that Chinese LED display companies can explore. At the same time, through cross-border mergers and acquisitions, we will actively enter the international competitive market and enhance our international influence. Enhance the international competitiveness of products by improving product quality and performance.

After Trump's victory, Chinese manufacturing companies will face new challenges and opportunities. However, despite facing many difficulties, China's LED display industry still has broad prospects for development, the Chinese government has been attaching great importance to the development of the LED industry, and has introduced a series of policies and measures to promote the research and development and application of LED technology. China's LED display enterprises, only by continuously strengthening independent innovation, improving product quality and technical level, can they be invincible in the fierce international competition.