- We are pleasantly surprised by US’ final USTR modifications on China tariffs, which will raise tariffs on China-made medical and surgical gloves to 50% by 2025 and 100% by 2026 - well above the 25% proposed in May 2024.
A boost to Malaysia glove makers competitiveness
- - Read this at SGinvestors.io -
- Our top BUYs are Hartalega and Kossan Rubber. We Upgrade Top Glove to a tactical BUY.
USTR finalises action on China tariffs
- The United States Trade Representative (USTR) has unexpectedly accelerated and increased tariffs on China-made medical and surgical gloves. The tariff will rise to 50% by 2025 and 100% by 2026, exceeding the 25% by 2026 proposed in May 2024 (vs. current tariff of 7.5%). For e.g., China glove ASP is currently at US$17-18/k pcs.
- - Read this at SGinvestors.io -
An unexpected positive development
- We expect this latest development to make Malaysia gloves more attractive in the US market. This market has been important for Malaysia glove makers (Top Glove: 15% of sales, Hartalega: 50%), which have been losing market share to their Chinese counterparts since 2021 due to intense price competition.
- While there is a risk that China glove makers may shift their focus to the European market (Top Glove: 35% of sales, Hartalega: 25%), we believe Malaysia glove makers could offset the loss of their market share in Europe with stronger sales in the US.
Short-term positive but long term remains uncertain
- Read more at SGinvestors.io.
