Event:
The office of the US trade representative said on March 23 that among the tariffs imposed on China under “article 301”, the tariff exemption of some Chinese imported goods will be restored. This tariff exemption involves 352 of the previous 549 pending products. This provision will apply to goods imported from China from October 12, 2021 to December 31, 2022.
Exempt some tariffs on China and promote the benign interaction between China and the United States
In terms of politics, since the situation in Russia and Ukraine is still in turmoil and the United States is under pressure from international public opinion in military and political aspects, it is of great significance to improve China US relations; In terms of economy, since April 2021, the inflation level of the United States has accelerated and the inflationary pressure has continued to rise. One of the important reasons is that American enterprises and consumers, rather than Chinese exporters, bear the cost of tariff hikes, which is reflected in the rising price of parts and components made in China. In this context, exempting some tariffs on China will help alleviate the pressure on the United States and curb the further rise of inflation to a certain extent.
The tariff exemption list includes various manufacturing parts and consumer goods, of which parts account for a relatively high proportion
The United States has become dependent on some imported goods from China. It is difficult for such goods to be manufactured locally. At the same time, it is difficult to find a substitute from other countries. The tariff policy may have a negative impact on the U.S. industrial chain. The key categories of tariff exemption involve parts and components such as motors, chargers and controllers, or reflect the United States’ desire to import parts and components from China for local assembly, so as to return the industrial chain to the mainland, stimulate the employment of American labor force and boost the economy.
The exemption of some tariffs may repair external expectations and bring greater upward flexibility to export chain companies
Under the improvement of Sino US trade relations, companies with high additional tariffs on products exported to the United States and high income from the United States / abroad will benefit. In 2020, the overseas income of Joy Kie Corporation Limited(300994) , Changzhou Kaidi Electrical Inc(605288) , Zhejiang Jiecang Linear Motion Technology Co.Ltd(603583) , Ningbo Daye Garden Machinery Co.Ltd(300879) , Xiamen Intretech Inc(002925) , Loctek Ergonomic Technology Corp(300729) will account for 98%, 47%, 78%, 94%, 94% and 90% of the total revenue respectively. Although the external environment of the export chain is relatively pessimistic at present, the exemption of some tariff measures against China will repair the external pessimistic expectation and bring greater upward flexibility to the export chain companies.
Investment advice
It is suggested to pay attention to: Joy Kie Corporation Limited(300994) , Changzhou Kaidi Electrical Inc(605288) , Zhejiang Jiecang Linear Motion Technology Co.Ltd(603583) , Ningbo Daye Garden Machinery Co.Ltd(300879) , Xiamen Intretech Inc(002925) , Loctek Ergonomic Technology Corp(300729) .
Risk tips
Covid-19 epidemic impact; The impact of business conditions; Risk of policy changes.
