A Brief Discussion on the Impact of the China US Trade War on the Instrument Industry

In the second round of the US China trade war, the chips prepared by the US were $200 billion worth of imported goods from China, and the US increased the use of chips step by step. Last September, the United States announced a 10% tariff on $200 billion worth of Chinese goods, instead of the previously threatened 25%. However, at that time, the US president left a tail - declaring that tariffs on these $200 billion goods would be increased to 25% in January 2019. However, this deadline was postponed several times later.

Just as the heat of the China US trade war seems to be gradually fading, the storm is rising again. On May 8th, the US unilaterally announced that it would raise tariffs on $200 billion worth of Chinese goods imported to the US from 10% to 25% on May 10th. The timing of this news spreading coincides with the start of the 11th round of China US economic and trade consultations (May 9-10). Thus, an extremely rare scene emerged in the trade negotiations, and this 11th round of China US negotiations is destined to take place amidst the sizzling flames of an escalating trade war. It is not difficult to speculate that the US side is not very satisfied with the results of the previous rounds of Sino US negotiations and is restless. This time, it has a sense of taking a gamble and intends to "finish it all in one battle".

If we analyze the $200 billion goods list involved this time, we will find that the list covers more than 6000 tax codes, including over 1000 tax codes for textile and clothing products, involving the vast majority of textile raw materials, semi-finished products, and a small number of clothing accessory products. According to data, this round of US taxation list involves approximately 10.3 billion US dollars in China's exports of textiles and clothing to the United States, accounting for 22.6% of China's exports of textiles, clothing, and raw materials to the United States, involving around 20000 export enterprises. It can be said that China's textile industry will once again face a severe test. Correspondingly, overall, the domestic market for textile testing instruments is also likely to be affected. So, where can textile testing instrument related enterprises find new opportunities?

According to the ranking of textile and clothing exporting countries to the United States, Vietnam, India, and Mexico rank in the top four. Vietnam, as the second largest textile and clothing import market in the United States, is likely to undertake orders transferred from China due to its relatively complete industrial supporting facilities, low production costs, and abundant labor. Textile testing instruments are attached to the textile industry, and wherever the textile industry shifts, textile testing instruments will naturally follow. Therefore, for textile testing instrument related enterprises, Southeast Asia, represented by Vietnam, and even South Asia, are likely to be markets worth cultivating and refining in the future.

Of course, the above is only a theoretical analysis and speculation. It is still worth pondering how many links in the textile industry chain Southeast Asian countries can undertake. For example, the upstream industry of the textile industry - dyes, is firmly in the hands of China. If you want to develop dyes, without a strong supporting chemical industry chain, you basically don't need to think about it. Another commonly used item on clothing - zippers, has nothing to do with high technology. But if you want to get the necessary raw materials for producing zippers, such as cheap and high-quality synthetic fibers and copper teeth and copper buckles, you have to support the refining polyester chemical industry, as well as the copper refining and processing industry, etc. Otherwise, you can only tolerate the exploitation of upstream countries.

Therefore, in just a few months, it can be questioned whether the US has found a new supply chain that can replace Chinese goods and has gained the confidence to "confront" China.

The trade war between China and the United States has entered a stage of "fighting while negotiating". Once the chips of the second round of the US are used, it will be worth paying attention to how China will launch a new round of counterattacks, which may have a significant impact on the domestic analytical instrument market.