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Xijiao Industrial Zone, Libao Town, Hai'an County, Jiangsu Province, China

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How should the machine tool industry face the international trade war?

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【Summary】:
The Sino-U.S. Trade war started on July 6. The United States began to impose a 25% tariff on US $ 34 billion in Chinese products. China has made it clear that China will never hit the first shot, but in order to defend the core interests of the country and the interests of the people, it has to be forced to fight back. Over the past few months, the machine tool industry has been watching the progress of the Sino-US trade war, because the trade war will have a corresponding impact on the machine tool industry. 1. About the Sino-US trade war The Sino-US trade dispute, also known as the Sino-US trade war and Sino-US trade friction, is an important issue in Sino-US economic relations. Trade disputes occur mainly in two
The Sino-U.S. Trade war started on July 6. The United States began to impose a 25% tariff on US $ 34 billion in Chinese products. China has made it clear that China will never hit the first shot, but in order to defend the core interests of the country and the interests of the people, it has to be forced to fight back. Over the past few months, the machine tool industry has been watching the progress of the Sino-US trade war, because the trade war will have a corresponding impact on the machine tool industry.
1. About the China-US trade war
Sino-US trade disputes, also known as Sino-US trade wars and Sino-US trade frictions, are important issues in Sino-US economic relations. Trade disputes mainly occur in two aspects: first, China has a comparative advantage in the field of exports; second, China has no advantage in the field of imports and technical knowledge. The former is basically competitive, while the latter is incomplete. The impact on the economic welfare and long-term development of the two countries is different. The main focus is now on the first aspect.
On June 15, 2018, the U.S. government released a list of tariff-increased goods, which imposed a 25% tariff on about 50 billion US dollars of goods imported from China, of which about 34 billion US dollars of goods began on July 6, 2018. The implementation of the tariff increase measures, and at the same time, about 16 billion US dollars in tariffs began to seek public opinion.
In the list of tariff increases, almost all machine tool products are covered. In other words, as long as it is a machine tool exported to the United States, no matter what kind of machine tool or grade, based on the original 5% tariff, a 25% tariff will be added to 30%. In addition, 25% tariffs are also levied on cutting tools, functional parts, accessories, and abrasive tools.
There are also many products included in the machine tool user field, such as: engines, mainly large equipment engines (including steam turbines, internal combustion engines, water turbines, turbofan engines, turboprop engines, electric motors, liquid pumps, compressors, etc.); engineering; Machinery, including cranes, mobile lifts, forklifts, bulldozers, pile drivers, etc .; transportation means, including tractors, cars, subways, motorcycles, helicopters, aircraft, rockets, ships, etc. .
Overall, the list released this time is still targeted at China's 2025 strategic industries, specifically aerospace equipment, high-speed rail equipment, next-generation information technology, agricultural equipment, CNC machine tools and industrial robots, biomedicine and medical equipment, new energy and new Materials, ships and marine equipment. Although this trade war, the intention of the United States is not only in the field of trade, but the most direct impact on companies in the machine tool industry is the increase of 25% tariffs.
Impact on the industry and corporate countermeasures
As a national industry organization of China's machine tool industry, the China Machine Tool Industry Association pays great attention to the development trend of the Sino-US trade war and what impact member companies will be affected in the future. In 2017, the total export value of machine tool products in mainland China was US $ 3.2 billion, and the value of exports to the United States was US $ 1.86 billion, of which US $ 350 million for metal processing machine tools and US $ 550 million for tools. Looking at the amount of exports from each enterprise, since the amount of exports is not large, it seems that the increase in tariffs has little effect. However, considering the long-term perspective of enterprises' development of international markets, the impact is still relatively large. To this end, we surveyed some companies in the industry that exported to the United States, including metalworking machine tools (metal cutting and forming), knives and tools, accessories, and abrasives companies, and summarized their situation as follows.
With the start of the trade war, companies exporting to the United States will definitely be affected accordingly. Enterprises with small export values can switch to other trade channels to reduce losses. But for companies with a large export share, especially export-oriented companies, especially some companies that have been exporting to the United States for more than 20 years, their losses will be conceivable.
However, it is gratifying that these companies did not wait and see, but actively cooperated with American customers and tried everything to reduce their impact. Since entering March, they have maintained close communication with US importers and distributors to discuss how to absorb the rising costs caused by the increase in tariffs.
For those products that lack characteristics, are easily replaced by others or lack competitiveness, the increase in tariffs will inevitably lead to a decrease in the US market share.
For those companies that specialize in customizing products for American customers, the market has always been stable, and long-term contracts have been signed with customers. The 25% increase in tariffs has a great impact on them. In order to minimize losses, some are prepared to adopt a strategy of sharing with the importers and distributors, and some companies are preparing to digest the US market share to other markets, open up new export channels, and so on.
There are two types of tariffs on the export of the tool industry to the United States. One is the finished product of the tool, which has not yet been increased in tariffs; the other is the raw material of the tool, which will increase by 25% in the future based on the original tariff.
In short, everyone is planning ahead and actively looking for ways. Of course, I also particularly hope that the government and associations will better communicate with countries outside the United States in terms of import and export cooperation, and do a good job of consulting and serving the machine tool industry to other countries.
Third, look at the long-term and improve yourself
How long the Sino-U.S. Trade war will continue, and what variables will remain, it is full of unknowns. We must pay close attention to the trend of the trade war in order to adjust our own response strategies. A few hours after the official start of the trade war, the U.S. Trade Representative Office announced at 3 am Beijing time on the 7th that those U.S. companies importing products from China that would be affected by the trade war could report to the United States within 90 days. The government applies for a "tariff exemption" valid for one year. No matter how the US government's policy changes, we should make long-term plans, innovate and improve products, reduce costs, open up new ways to expand exports, and make great efforts to increase the development of domestic and international markets. In order to improve the competitiveness of products, we can achieve constant development and achieve healthy development of industry enterprises.
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