Construction + Economy, Lighting Industry

U.S. Evolving And Escalating Trade War With China

The United States government and some allies are evolving and escalating the trade war with China. During the Trump administration, the trade war was characterized by increasing trade tariffs, most of which are still in place today, during the Biden administration.

Now the trade war is escalating in new directions.

FRIENDSHORING:

In the past month, both the U.S. and Canada have begun taking policy actions to promote trade shifts from China to allies. Both countries are referring to the strategy as “Friendshoring,” a term Treasury Secretary Janet Yellin coined last year.

The intent is to make supply chains more resilient and reduce the ability of hostile actors from taxing or withholding goods. Trading with other democracies prevents economic extortion and being vulnerable to exploitation by hostile foreign powers.

The policy is risky because it could escalate trade tensions with China, increase prices for goods, miss economic opportunities, and limit U.S. exports.

More information on friendshoring is available here.

SEMICONDUCTOR CHIP RESTRICTIONS:

Last October, the Biden administration announced sweeping restrictions on China’s access to semiconductor chips made in any country using U.S. technology in order to slow Beijing’s technological and military rise. The U.S. is trying to cut off China’s access to technology to make advanced computer chips. The Chinese government is struggling to determine how to retaliate without hurting its own ambitions in telecoms, artificial intelligence, and other tech industries.

China has its own chip foundries, but they supply only low-end processors used in autos and appliances. Japan and the Netherlands have joined the U.S. in limiting China’s access to technology they say might be used to make weapons. Especially painful to China was being blocked from buying a machine available only from a Dutch company, ASML, that uses ultraviolet light to etch circuits into silicon chips on a scale measured in nanometers. This equipment is essential to making transistors faster and more efficient by packing them together on tiny silicon chips.

More information on U.S. computer chip restrictions is available here.

In addition to friendshoring and computer chip restrictions, the U.S. is also creating trade restrictions on biotechnology and quantum tech.

What will all of this mean for the lighting industry? It will likely accelerate lighting manufacturers looking to create production capabilities outside China to regions like India, Southeast Asia, and Mexico, as well as some “reshoring” to the U.S. The Trump era tariffs started this trend, and the new trade war policies could accelerate the industry’s moves away from China, albeit gradually and based on individual manufacturers’ risk tolerance.

Are you seeing lighting industry impacts from this latest round of trade war escalation? Please share in the comment section below.

Image: Pexels.com

author avatar
David Shiller
David Shiller is the Publisher of LightNOW, and President of Lighting Solution Development, a North American consulting firm providing business development services to advanced lighting manufacturers. The ALA awarded David the Pillar of the Industry Award. David has co-chaired ALA’s Engineering Committee since 2010. David established MaxLite’s OEM component sales into a multi-million dollar division. He invented GU24 lamps while leading ENERGY STAR lighting programs for the US EPA. David has been published in leading lighting publications, including LD+A, enLIGHTenment Magazine, LEDs Magazine, and more.

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