Chinese Mining Hardware Manufacturers Impact by Trump Tariffs
The escalating US – China trade war threatens to have an adverse impact on the operations of Chinese mining equipment manufacturers, with imports of mining hardware now facing stateside tariffs of more than 25%.
Harsh Hardware Duties
In June, the Office of the United States Trade Representative reclassified Bitmain’s Antminer S9 as an electrical machinery apparatus, instead of a data processing machine, subjecting it to a 2.6% tariff. But in late August, the administration of US President Donald Trump followed up on that decision by imposing an additional 25% tariff on Chinese mining hardware, bringing total tariffs on the Antminer S9 to 27.6%. Ben Gagnon, the co-founder of Hong Kong-based mining hardware developer Lutech said: All manufacturers of mining rigs based in China will likely be affected by the tariff code change and, in turn, captured by the US trade tariff.
IPO Prospects of Mining Manufacturers to be Impacted
Analysts believe the new tariffs could have a negative impact on the planned IPOs of Chinese manufacturers Canaan Creative and Ebang International in Hong Kong. In 2017, 8.5% of Canaan’s total revenue originated from international markets, while non-Chinese demand accounted for only 3.8% of Ebang’s revenue.
Bitmain, however, is believed to be the most exposed of China’s mining hardware manufacturers to the new tariffs. According to its IPO prospectus, approximately 51% of its sales came from outside of China in the 2016-17 period. It also said its financials could be impacted by changes to tax rates driven by economic and political conditions. Mark Li, senior analyst at Sanford C. Bernstein, said that the company is probably more concerned about rising competition in the mining hardware market. The US tariff is probably not something on the top of the management’s minds now.