Guest post: Florian Rotberg, Invidis
Despite the current USMCA free trade agreement that Donald Trump signed with Canada and Mexico during his first term in office, the president-elect plans to impose new tariffs of 25 percent on all imports from Mexico and Canada, and an additional 10 percent on all imports from China.
The newly-announced tariffs could significantly impact the digital signage industry in the US, as more than 50 percent of displays, LEDs and media players are either imported from China or assembled by manufacturers in Mexico. Many digital signage hardware manufacturers have opened factories in Mexico in recent years to take advantage of the free trade zone between Canada, the US and Mexico.
Currently, electronics products for commercial use imported into the United States from China are subject to a 6 percent tariff, while products from Mexico are duty-free. Unlike cars and other categories, electronics products have so far been spared from punitive tariffs imposed by the first Trump and Biden administrations.
An additional tariff of 10 percent on products from China and 25 percent on products from Mexico would have a significant impact on the prices of digital signage hardware in the United States. These are the largest importers of electronics into the United States, according to 2019 data from the U.S. International Trade Commission .
- China 34.5%
- Mexico 17.4%
- Malaysia 6.2%
- Taiwan 5.5%
- Vietnam 4.7%
- Japan 4.5%
- Germany 3.5%
- South Korea 3.5%
- All other countries 20.2%
According to experts, new tariffs on imports from the United States’ three largest trading partners would significantly increase costs and disrupt the economy in all economies involved.
LCDs and LEDs in particular are not currently manufactured in the USA. Local production lines could be set up in the foreseeable future, but the main components would still have to be imported from China. Alternatively, Samsung, LG and Co. could start shipping from their factories in Vietnam, Indonesia, Malaysia or even the EU. Selected Chinese LED manufacturers already ship their hardware from the EU to the USA, as “Made in China” is becoming increasingly difficult to identify. But diverting production facilities to the USA – the largest digital signage market in the world – would impact the supply and prices of digital signage in the rest of the world as well.
Stratacache CEO Chris Riegel has started building a local LED assembly facility on the US West Coast in Oregon, but is still waiting for certain assembly machines to arrive. Demand for LED assembly tools is very high, especially from automotive suppliers.
If Donald Trump follows through on his announcement after his inauguration in January, the digital signage industry could see significant price increases across most hardware categories. The impact is already being felt, with ports in Europe reporting a 40 percent increase in container shipments to the U.S. since the election. Goods likely to be affected by new tariffs are shipped to the U.S. from Asia, but also from distribution centers around the world to replenish inventory, so the impact on hardware prices could also be felt outside the U.S.