Understanding the Impact of Reciprocal Tariffs on the Display Industry's Global Supply Chain

In recent years, the uncertainty of the global trade environment has intensified, and the United States has continued to tighten its trade policy towards China, especially in the field of high-tech industries. In 2024, the United States will officially implement a new round of reciprocal tariff policy, in which the display industry will become the key adjustment object. This policy not only directly affects the trade relationship between China and the United States, but also has a profound impact on the global display supply chain. This article will analyze the specific content of the U.S. reciprocal tariff policy, discuss its impact on the overseas display supply chain, and look forward to the possible direction of industry adjustment in the future.

Background and main content of the U.S. reciprocal tariff policy

1. Policy background

Since the start of the trade war with China in 2018, the United States has gradually imposed tariffs covering many key industries such as electronics, semiconductors, and display screens. In 2024, the U.S. government will further adjust the tariff structure and implement a "reciprocal tariff" policy, that is, imposing tariffs on display products exported from China that are the same or higher than those of similar products in China to the United States, in order to "balance the terms of trade".

2. Mainly related to products

LCD (Liquid Crystal Display): Mainly used for TVs, monitors, laptops, etc.
OLED (organic light-emitting diode): the core component of high-end mobile phones, wearable devices, and high-end TVs.
Mini/Micro LED: Emerging display technology, applied to the high-end display market.

3. Tariff Range

The tariff on LCD panels has been increased from 5% to 15%-20%.

OLED panel tariff increased from 10% to 25%

Tariffs on Mini/Micro LED related components will be increased to 30%.

This policy aims to restrict the export of China's display industry to the United States, while promoting the restructuring of the supply chain of the United States or allied countries.

Impact on the global display supply chain

1. China's display companies are facing export pressure

China is the world's largest display producer, BOE, TCL Huaxing (CSOT), Tianma and other companies occupy more than 50% of the global LCD market, and are rising rapidly in the OLED field. After the U.S. tariffs are imposed, the cost advantage of Chinese companies is weakened, which may have the following effects:

Order shifting: Some U.S. brands (e.g., Apple, Dell, HP) may reduce their purchases of Chinese panels and turn to South Korean (Samsung, LG) or Japanese (JDI) suppliers.

Profit compression: The cost of tariffs may be shared by multiple parties in the supply chain, but the profit margins of Chinese companies will be directly affected.

2. South Korean and Japanese companies have benefited in the short term, but they are facing supply chain adjustments

South Korea's Samsung and LG Display are leaders in the global OLED market, and the U.S. tariffs may allow them to get more orders.

displays and may become an alternative supplier.However, these companies are also dependent on Chinese supply chains (e.g., glass substrates, driver ICs, etc.),

and Japanese and South Korean companies may also face the risk of supply shortages if China takes countermeasures (such as restricting exports of critical materials).

3. Southeast Asia and India have become new manufacturing centers

In order to circumvent tariffs, some companies may accelerate the transfer of production capacity to Southeast Asia (Vietnam, Malaysia) or India:

Vietnam: It has attracted Samsung, LG and other enterprises to invest in display module assembly plants.

India: With the support of the "Make in India" policy, BOE, TCL and other companies are considering building factories in the local area.

However, this process faces challenges, such as insufficient infrastructure, incomplete industrial chains, and a shortage of workers' skills.

Long-term impact and industry adjustment direction

1. Supply chain diversification is accelerating

The company will adopt the "China 1" strategy, while retaining Chinese production capacity, expand to Southeast Asia, Mexico and other places to reduce the risk of dependence on a single market.

2. Intensified competition in technology

China: It is possible to accelerate the research and development of high-end technologies such as Mini/Micro LED and flexible OLED, and reduce the dependence on traditional LCD.

South Korea: Samsung and LG may further invest in next-generation technologies such as QD-OLED and transparent displays

United States: Subsidies (e.g., the CHIPS and Science Act) may be used to support local display technology research and development.

3. Trade frictions may trigger a chain reaction

If China takes countermeasures, such as restricting the export of critical materials, the global display supply chain could face a more serious risk of disruption, leading to higher prices and delivery delays.

conclusion

The implementation of the U.S. reciprocal tariff policy has a far-reaching impact on the global display industry:

Short-term: Chinese companies are hindered in exports, South Korean and Japanese companies may benefit, and Southeast Asia and India have become new manufacturing centers.

Long-term: The restructuring of the supply chain is accelerating, technology competition is intensifying, and the industry may develop in a more high-end and decentralized direction

In the future, the competition in the display industry is not only a competition of cost and scale, but also a competition of supply chain resilience and technological innovation capabilities. Companies need to be agile in adapting their strategies to the ever-changing global trade environment.