Did Trump's trade tariffs impact laser sales?

If President Trump were to sever the flow of goods to and from China, then lasers might well be affected.

Allen Nogee 720

In 2017, the United States started off the year with a new President, Donald Trump, who vowed to "rework" or "eliminate" bad trade deals, especially the ones the United States had with China. China alone consumes over 40% of the world's lasers, and most of these lasers—at least the higher-power materials processing lasers—are made in the U.S. and Europe and shipped to China. In many cases, these lasers are used in China and the rest of Asia to manufacture goods, which ultimately arrive back in the U.S. and Europe. If Trump were to sever the flow of goods to and from China, then lasers might well be affected.

In 2017, the U.S. economy gained some steam and grew stronger than in 2016. Europe economy was stabilizing from its Brexit shock, and China's GDP growth rate continued to slow a few tenths of a percent, just like it did the year before. What happened to worldwide laser revenue in 2017? Simply put, it went through the roof. Overall, worldwide laser revenue grew almost over 18%. In Europe, the Middle East, and Africa, laser revenue grew 16%, but in China, Japan, Korea, and Australia, the growth was close to 20%. In North America, laser revenue in 2017 was flat. In high-power materials processing lasers, revenue grew overall 48%, with almost all the growth coming from China.

The truth is, we can never know with 100% certainty what causes the laser markets to suddenly rise or drop, but we strongly believe the laser growth we saw in 2017 was tied to two factors:

First, President Trump was very clear of his intentions to start imposing various tariffs between the U.S. and other countries, especially China, so many companies that were considering purchasing lasers accelerated their purchases so that they would occur before the tariffs were implemented. We saw this also occur with other products believed to be impacted by tariffs such as steel.

Second, we witnessed a very large bump in infrastructure spending in 2017, and this bump in spending also meant the need to purchase additional lasers to complete these projects. The economy in China was slowing, and the Chinese government was doing what it could to cushion this slowdown. Adding these two factors together meant China purchased a record number of lasers in 2017 from companies both inside and outside of China.

Read the full commentary from Allen Nogee:

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