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US-China Trade War Will Affect Mining Manufacturers With New Tariffs

It seems that the trade war will change the whole landscape of importing goods and machinery from China to the US and vice-versa. Some companies are already preparing for this new hit of tariffs that will likely affect the way that they face expansion. While some will without a doubt focus more in the internal market, promoting its goods to their own people and doubling down on local consumption, there is no denying that Europe and other countries will be targeted by companies as possible expansion destinies.
This is especially true for companies like Bitmain, that are producers and exporters of high tech cryptocurrency mining gear that will get a hefty import tax due to new measures taken by the US government facing the imminent trade war. According to an article by the South China Morning Post, the mining machinery will be heavily taxed due to a new classification of this kind of products.
Now the mining equipment will be classified as “electrical machinery apparatus”, a class of import that is in the list of products that would have to pay 25% more taxes due to the international trading war. Before, this kind of products was classified as “data processing machinery”, only paying 2.6% import taxes.
This will surely affect cryptocurrency mining companies that are looking to expand to the USA because their products won’t be competitive with local offers, or will push these manufacturers to build companies there if they want to bring their products to America.
Bitmain, the most important cryptocurrency mining hardware manufacturer, will be surely the most affected due to its size and quantity of equipment going to the USA. This will also have ramifications in the business forecast of these industries for the next year, considering that these measures will be in full effect on the next August.
Also, Bitmain’s IPO (Initial Public Offer) could also be affected in a negative way with this tariff announcement: investors will be less eager to put their money in a company that will be heavily taxed and will face problems to get inside an important market.
While most of the cryptocurrency mining farms and machinery are located in China, where these tariffs have no effect there is still an important part of Bitmain’s machinery that is sold overseas: according to some sources, more than half of Bitmain’s inventory is directed to the international market.
So, this is a rare case when internationalization and diversification could be playing against Bitmain in the long run. Other mining manufacturers are directed to the local market and will be less harmed by this new tariffs.

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