Impact and Response of China-U.S. Reciprocal Tariffs on Chinese LED Display Exports

Recently, trade tensions between China and the United States have escalated once again. The U.S. announced new tariff increases on Chinese goods exported to the U.S., and in response, China implemented reciprocal tariffs. This development has drawn global attention, with China’s LED display export industry being significantly affected. As the world’s largest producer and exporter of LED displays, China counts the U.S. as one of its key overseas markets. Prior to this round of tariff changes, Chinese LED displays had captured a large share of the U.S. market due to their high cost-performance ratio. However, the implementation of reciprocal tariffs has drastically altered this landscape.

The increased tariffs have directly raised the cost of Chinese LED displays in the U.S. market. Since LED display production involves multiple stages and a complex supply chain, the cumulative effect of tariffs has forced manufacturers to increase their final selling prices. This is a major blow to Chinese LED display companies that have long relied on price competitiveness to penetrate the U.S. market. For example, one leading company saw the price of a commonly sold LED display rise by about 25% in the U.S. after tariffs were imposed, effectively eroding its pricing advantage. In some cases, U.S. importers have asked manufacturers to share part of the tariff burden, further squeezing corporate profit margins.

Market demand has also shifted due to the tariffs. On one hand, rising costs have led price-sensitive customers to seek more affordable alternatives or source similar products from other countries. On the other hand, although some high-end clients remain willing to pay for the superior quality of Chinese LED products, overall market demand has been dampened. Data from the 2018 China-U.S. trade conflict shows that Chinese LED exports to the U.S. experienced a short-term decline during that period. Similar market volatility is likely to follow the current tariff implementation. Chinese companies have already reported a short-term drop in orders from the U.S., with buyers becoming more cautious and significantly more price-sensitive.

In response to the tariff pressure, many Chinese LED display companies have begun adjusting their supply chain strategies. Some are considering establishing production facilities in the U.S. or other countries to reduce the cost impact of tariffs. However, this shift requires significant investment of time and capital and comes with various uncertainties, including local labor costs, regulations, and market conditions. Absen, for example, has explored setting up a production base in the U.S. While this could help reduce tariff expenses, high local labor costs and complex regulatory frameworks have posed considerable operational challenges. Additionally, some American customers have delayed purchasing due to the tariff situation, putting further pressure on quarterly revenues and causing short-term fluctuations in order volume.

Amid these difficult circumstances, Chinese LED display companies are taking active steps to mitigate the impact. Many are increasing their R&D investments to enhance the technological sophistication and added value of their products, using innovation to boost competitiveness. Companies are introducing high-end LED displays featuring higher resolution, lower energy consumption, and longer lifespans to better serve premium customers and ease tariff-related pressures. NationStar, for instance, has heavily invested in R&D and released LED products with ultra-high refresh rates and exceptional color accuracy. These technical advantages have helped it win over more high-end clients, effectively offsetting the impact of tariffs. Despite the challenges, NationStar’s exports of high-end products to the U.S. still recorded a 5% growth in 2024.

Diversifying market reach has also become a common strategy. Companies are no longer solely dependent on the U.S. and are actively exploring markets in Europe, Asia, and Africa. For example, some have seized the opportunity presented by the Belt and Road Initiative to establish strong partnerships with countries along the route, promoting their LED displays in these emerging markets. Ledman Optoelectronic Co., Ltd., for example, has leveraged the Belt and Road Initiative to form partnerships with companies in various developing countries, successfully expanding into regions such as the Middle East and Southeast Asia. This has reduced the company’s reliance on the U.S. market. In 2024, Ledman’s exports to Belt and Road countries grew by 25%, partially offsetting the drop in U.S. market share.

On the policy front, government agencies are stepping up to support businesses. Authorities are encouraging innovation by offering R&D subsidies, tax incentives, and other measures to enhance companies’ independent innovation capabilities. At the same time, the Chinese government continues to communicate and negotiate with the U.S. side, striving to resolve trade disputes through dialogue and to create a more stable and fair trade environment for businesses.

Although the reciprocal tariffs between China and the U.S. have posed serious challenges for China’s LED display export industry, they have also accelerated corporate transformation, innovation, and market diversification. With concerted efforts from both businesses and the government, China’s LED display industry is expected to turn these challenges into opportunities and achieve sustainable development in the face of ongoing trade uncertainties.