Tariff uncertainty: How display industry players can navigate risks and stay ahead

Tariff uncertainty continues to challenge the display industry, with ongoing negotiations and shifting trade policies creating a complex landscape for manufacturers and suppliers. As of February 13, 2025, key activities surrounding tariff issues remain in flux, leaving industry players grappling with potential risks and outcomes. Will negotiations lead to exemptions, or will tariffs on Chinese and Mexican displays reshape the market? This blog examines the latest developments, potential scenarios, and strategic actions companies can take to mitigate risks in an unpredictable trade environment.

As of now, the timeline for key activities related to tariff issues in February is taking shape. With ongoing negotiations and shifting trade policies, industry participants must prepare for multiple possible outcomes and their impact on the display market:
·   February 1, 2025, the White House announced new tariffs on Canada, Mexico, and China, citing immigration and drug emergencies. President Donald J. Trump imposed a 25% tariff on imports from Canada and Mexico, and a 10% tariff on imports from China until the situation is resolved. Energy imports from Canada will be subject to a lower 10% tariff. The tariffs were set to take effect at 12:01 am Eastern Standard Time (EST) on February 4, 2025.
·   February 3, 2025, the US and Mexico reached an agreement on immigration and drug trafficking. As part of the deal, tariffs on Mexican imports were suspended for one month delaying implementation until March 4, 2025.
·   February 4, 2025, the 10% tariff on all Chinese goods took effect. Almost all products from China and Hong Kong -whether imported for consumption or withdrawn from warehouses - are now subject to the tariff as of 12:01 am EST on February 4, 2025.
·   February 4, 2025, China retaliated against the US tariffs imposing a 15% tariff on US coal and liquefied natural gas (LNG) and a 10% tariff on crude oil, farm equipment, certain trucks, and larger-engine sedans. These tariffs came into effect on February 10. Additionally, China announced export controls on critical metals used in electronics, military equipment, and solar panels. 
·   February 13, 2025, President Trump introduced the “Fair and Reciprocal Trade Plan.” The memo directed staff to develop a plan for “reciprocal trade and tariffs” within 180 days. The administration will address each affected country individually with studies on the issue expected to be completed by April 1, 2025.

Display industry participants are concerned about the evolving tariff landscape and are struggling to mitigate associated risks. Amid unpredictable tariff policies and global geopolitical uncertainties, some industry players had adopted the mindset that “doing nothing is doing everything.” This sentiment reflects the belief that supply chain participants have limited options or feel powerless navigating these challenges.

Managing unpredictable tariff policies has become a top priority for the industry. To stay resilient, businesses must take proactive measures, develop scenario-based strategies, and prepare for multiple potential outcomes.

Actions taken in February to mitigate tariff risks

Ahead of the February 4, 2025, tariff implementation, TV and IT display makers took strategic steps to minimize risk and ensure supply chain stability:

TV industry actions:
·   Maximized TV production in Mexico for manufacturers with existing facilities.
·   Increased TV inventory levels and week of sales (WOS) for the US market.
·   Adjusted TV panel demand forecasts for 4Q24/1Q25.
·   Conducted assessments and prepared contingency plans for potential additional tariffs.

Monitor/notebook PC industry actions:
·   Increased production output ahead of the Chinese New Year holidays.
·   Boosted monitor and notebook PC inventory levels or WOS for the US market.
·   Increased monitor and notebook PC panel demand forecasts for 4Q24/1Q25.
·   Accelerated the shift of production from China to South-Eastern Asian countries such as Vietnam and Thailand.
·   Conducted scenario planning and developed backup strategies for additional tariffs.

Following the implementation of new tariffs, post February 4, 2025, TV and IT display makers are  adjusting their strategies:

TV industry actions
·   Continuing TV set production  at factory sites in Mexico and advancing output where possible.
·   Maintaining high inventory levels and higher WOS for the US market.
·   Keeping the TV panel demand forecasts unchanged for 1Q25.
·   Adopting a wait-and-see approach; no decisive action has been taken regarding a potential production shift from Mexico to other locations.
·   Feasibility studies revealed challenges with alternative production sites. Manufacturing in the US is not viable due to costs exceeding 25% while expanding production in South-East Asia would raise costs. Manufacturing TVs in Egypt or Eastern Europe would only double lead times and raise supply chain costs.

Monitor/notebook PC industry actions
·   No urgency to increase production in China as meeting the March 7, 2025, deadline would require costly air shipments.
·   Brands are exercising caution with new purchases due to relatively high panel inventory levels.
·   Lowered production forecasts for February and March, driven by overbooking and well-stocked inventories.
·   Despite the 10% tariff increase on Chinese, some monitors and notebook PCs continue to be produced in China.
·   Shift from China to Southeast Asia is evident but gradual. Manufacturers require time and investment to expand their production capacity outside of China while managing supply chain costs to remain competitive, just as they were in China.
·   Ongoing expansion of monitor and notebook PC production in Southeast Asia.

TV display industry actions:
·   Maintain and accelerate TV production in Mexico.
·   Sustain high inventory levels and WOS for the US market.
·   No immediate changes to 1H25 TV panel demand forecasts but a potential demand correction in 2H25.
·   Explore cost-effective solutions, including automation for production reshuffling and supply chain rerouting.
·   Adopt a wait-and-see approach; seek new business opportunities outside the US amid US market uncertainty.
·   US TV demand will be impacted, particularly for small- and mid-sized TVs produced in China due to the additional 10% tariff.
·   Market outlook is positive in 1H25, but negative in 2H25.

Monitor/notebook PC display industry:
·   China remains the largest producer of monitors and notebook PCs, but its share will gradually decline.
·   Expand manufacturing capacity outside of China to mitigate risks.
·   Continue optimizing costs through production reshuffling and supply chain rerouting.
·   No immediate changes to the 1H25 panel demand forecasts, but a risk of demand correction in 2H25.
·   Wait-and-see approach, exploring new business opportunities beyond the US in response to market uncertainty.

Scenarios and impacts – No tariffs for Mexico, but tariffs for China

TV display industry
·   TV production in Mexico stabilizes.
·   US inventory levels or WOS must be reduced. TV sell-through, brand competition, and TV panel prices will be key variables.
·   US TV panel demand may normalize or see slight declines in 2Q25.
·   Remaining TV production in China will relocate to South-Eastern Asia.
·   Minimal impact on US TV demand, maintaining a neutral effect on the TV display industry; panel must adopt a production-to-order strategy in 2Q25 to maintain supply chain bargaining power in panel price negotiations.

Monitor/notebook PC display industry
·   Accelerate relocation of production from China to Southeast Asia (Vietnam, Thailand, etc.).
·   Monitor and notebook PC panel demand in the US is expected to stabilize or decline in 2Q25 as production transitions and inventory levels adjust. The sell-through of the monitor and notebook PC set is also a critical swing factor.
·   If manufacturers pass the tariff increase costs to customers, US demand for monitors and notebook PCs will decline.
·   Overall market outlook for monitors and notebook PCs remains negative.

Scenarios and impacts – Tariffs for both Mexico and China

TV display industry
·   TV production in Mexico will expand to alternative locations, including Southeast Asia, Egypt, and Eastern European (like e.g. Poland.
·   Factory shutdowns in Mexico will force TV makers to restructure production and reroute  supply chains.
·   Higher supply chain costs and longer lead time will create additional challenges.
·   Inventory levels and WOS for the US market must increase, requiring stricter inventory management.
·   TV panel demand forecast is expected to decline.
·   Prepare for the worst-case scenario –tariff costs may be passed on to retailers and consumers, driving higher average selling prices for TVs in the US  and reducing  TV demand.
·   Significant downward pressure on US TV demand is expected.

Monitor/notebook PC display industry
·   Acceleration relocation monitor and notebook PC production from China to Southeast Asia (Vietnam, Thailand, etc.) as soon as possible.
·   US market demand for monitor and notebook PC panels is expected to normalize or decline in 2Q25 once production shifts and inventory levels normalize. Monitor and notebook PC set sell-through is the other critical swing factor.
·   If manufacturers pass tariff increase costs onto customers, demand for monitor and notebook PC demand in the US will likely decline.
Scenarios and impacts – Tariffs on Chinese displays

TV display industry
·   There is a low possibility unless the US government targets China’s market dominance and TV panel profits.
·   If tariffs are imposed on Chinese-made TV displays, Chinese panel makers may implement aggressive pricing strategies for the US market reducing profit margins . This situation may present a hurdle for the transition to larger-sized displays in the US.

Monitor/notebook PC display industry
·   There is a low possibility unless the US government is concerned about China’s dominance or increasing competition in the monitor and notebook PC display markets.
·   If tariffs are imposed on Chinese-made monitor and notebook PC displays, Chinese panel makers may adopt pricing-cutting reducing profit margins.
·   For sensitive applications, such as the military, top US brands need to revise their supply chain strategy, including expediting the “No China, No Taiwan” (NCNT) policy.

To read more insights and analysis covering market trends and industry forecasts prepared by Omdia’s Display practice, click here.