impact of the US tariffs
2025-04-08 15:52:17
- TAG :
The impact of the US tariffs on spring machines mainly includes the following aspects:
Cost and price
• Increased production costs: If spring machine manufacturers import raw materials or parts from the United States, the tariffs will increase import costs. If the company absorbs the costs itself, the profit margin will be compressed; if part or all of it is passed on to consumers, the product price will increase.
• Decreased export price competitiveness: For companies exporting spring machines to the United States, the price of products in the US market will increase after the tariffs are imposed. If costs cannot be reduced by other means, the price competitiveness will be weakened compared with similar products in the United States or other countries not affected by tariffs, which may lead to a decline in market share.
Market demand and orders
• Customer order fluctuations: American customers may reduce the number of orders or delay delivery due to the increase in spring machine prices, or even look for other alternative products or suppliers. For example, Meili Technology's North American orders in Q4 2024 fell by 15% month-on-month, and some customers turned to local suppliers in Mexico.
• Market expansion is hindered: The imposition of tariffs makes it more difficult and costly to enter the US market. Companies' plans to expand the US market may be hindered, and they need to re-evaluate their market strategies and shift their focus to other countries or regions.
Enterprise response strategies
• Capacity transfer: Setting up factories overseas is an effective way to circumvent tariffs. For example, Meili Technology invested US$30 million in 2024 to establish Meili Mexico, which will be put into production in Q2 2025. By using the USMCA rules of origin, springs produced in Mexico can enjoy zero tariffs when exported to the United States.
• Supply chain optimization: Enterprises can reduce the risk of raw material cost fluctuations by optimizing the supply chain, increasing the localization rate of raw materials or finding other alternative materials. They can also establish long-term cooperative relationships with suppliers to strive for more favorable purchase prices and payment terms. For example, Meili Technology signed a long-term contract with Shengyi Technology to lock in the price of copper clad laminates and built its own electroplating production line to reduce processing costs.
• Technology upgrade and product differentiation: Through technological innovation, improve product quality and performance, achieve product differentiation, increase product added value, increase customer sensitivity to price, and reduce the impact of tariffs on product competitiveness.
In addition, tariff policies may change over time, and enterprises need to pay close attention to policy trends and adjust response strategies in a timely manner.