Oct 2, 2018 5:53:02 PM
For the global electronics industry, the impact from the tariffs between China and the U.S. is starting to grow. As a globalized industry, the spread of supply chains worldwide helped major OCMs, OEMs and EMS companies to divert production plants to take full advantage of regional benefits. When the trade war first began in July, the industry expected this to be “a short-term situation” and for customer behavior to experience “very little” change. However, as the situation escalates with increasing tariff invoices and no signs of relief, a trace of fear concerns regarding “where next” is spreading across the industry.
Among electronic components, passive components including capacitors, resistors, connectors and more are on the tariff lists from both the U.S. and China. Some of the impacted lines are 3M, Molex, TE Connectivity, Amphenol, AVS, TDK and Kemet. For example, when importing diodes into the U.S. with an HS code of 85414060 and manufactured in China, the importer is subjected to a 25% tariff. On the other hand, LED products with an HS code of 85414010 and manufactured in the U.S. will be subjected to a 25% tariff when importing in China. Although it is possible to source these products from their non-China or non-U.S. manufacturing sites based on the import destination, the increase in labor and lead times may create chaos to the supply chain, especially for highly allocated parts. While big companies may manage to absorb the increased costs, small-to-medium sized companies could experience challenges.
Going forward, with the ongoing server trade negotiation between the U.S., the Europe Union, Canada, Mexico and China, the electronics industry may react by:
It is important for technology manufacturers to have a trustworthy supply chain partner to mitigate significant challenges in today’s political and economic environment. With 40+ years of industry experience, insightful market knowledge, and a global network of qualified suppliers, Advanced MP Technology is well-positioned to help OEM and EMS companies succeed.
Contact your account manager today to discuss your customized supply chain solutions with Advanced MP Technology.
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