Policy Storm: Heavy Update on US Tariff Policy
Against the backdrop of the continuous evolution of the global trade pattern, April 2, 2025 has become a highly anticipated timeline. On this day, the US government issued a series of new tariff policies, like a giant rock thrown into a calm lake, causing waves in the field of international trade. These policies involve numerous industries, from traditional manufacturing to emerging technology industries, covering almost all aspects of US foreign trade. The wide and deep impact of these policies has forced global market participants to re-examine their business layouts and development strategies.
The adjustment of tariff policy this time is not an isolated event, but another manifestation of the increasing trend of trade protectionism in the United States in recent years. In the past few years, the US government has frequently used tariff measures in an attempt to achieve so-called "fair competition" in international trade, but in reality, it has triggered a series of chain reactions that have disrupted the stability of the global trade order. The introduction of this new policy has made the already complex international trade situation even more confusing. For the Chinese communication tower industry, this policy change is undoubtedly a heavyweight bomb, and an industry transformation that combines challenges and opportunities has quietly begun.
Before delving into the impact of US tariff policies on China's communication tower industry, it is necessary to conduct a comprehensive analysis of the current situation of China's communication tower industry and understand its development foundation and trends.
In recent years, the communication tower industry in China has shown a vigorous development trend, with the market size continuously expanding and playing an increasingly important role in the national economy and social development. As the world's largest provider of communication tower infrastructure services, the relevant data of China Tower is a powerful witness to the prosperity of the industry. As of the end of September 2024, the number of tower type station sites reached 2.081 million, an increase of 35000 from the end of 2023; The number of tower tenants reached 3.753 million, an increase of 95000 from the end of 2023; The average number of tenants in the tower category is 1.80 households. Such a large site and tenant scale have built a widely covered and powerful communication network, laying a solid foundation for the development of China's communication industry.
The development of China's communication tower industry has also driven the coordinated progress of the upstream and downstream industrial chains. From upstream raw material supply such as steel and cement, to midstream communication tower manufacturing and installation, and downstream communication service operation and network maintenance, a complete and vast industrial ecosystem has been formed. Numerous enterprises in this ecosystem play their respective roles and collaborate with each other to jointly promote the development of the industry, creating enormous economic value and social benefits.
With the comprehensive arrival of the 5G era, the communication tower industry has ushered in unprecedented opportunities for technological innovation and is undergoing profound technological changes and upgrades. New types of base station equipment continue to emerge like mushrooms after rain, providing strong support for the efficient operation of communication networks. For example, the deployment of Huawei 5G-A base stations has exceeded 100000 stations, supporting downlink speeds of up to 10Gbps, which is nearly 10 times higher than 4G. Through independently developed base station chips, the processor efficiency has been significantly optimized, and it also performs well in energy consumption control. The patent "A Dual Polarization Dual Frequency Base Station Antenna" (Publication No. CN118889034A) applied by Zhongtian Communication Technology Co., Ltd. effectively reduces the generation of high-order modes in resonators, suppresses harmonics, and improves the adaptability of base stations in complex environments through innovative design.
Intelligence and greenization have become two important trends in the development of communication tower technology. The application of intelligent technology enables communication towers to achieve self-monitoring, fault warning, remote control and other functions, greatly improving operation and maintenance efficiency and network stability. For example, by installing intelligent sensors and monitoring devices on communication towers, real-time data on device operation and environmental information can be collected. Once abnormal situations are detected, the system can promptly issue alerts and take corresponding measures, effectively reducing operation and maintenance costs and fault risks. Greenization is reflected in the design and construction of communication towers, which pay more attention to energy conservation and emission reduction, adopt new materials and energy-saving technologies, and reduce energy consumption and environmental pollution. Huawei's "0-bit, 0-watt" network technology has a low standby power consumption of only 5W and an RF module shutdown rate of up to 99%. It can enable base stations to enter ultra deep sleep during non peak hours, saving an average of 17.6% of energy per day, making a positive contribution to environmental protection and sustainable development.
The adjustment of US tariff policy has had a significant impact on the export cost of Chinese communication towers, and many related enterprises are facing the severe challenge of significantly increasing costs. Taking a well-known communication tower manufacturing enterprise as an example, before the implementation of tariff policies, the comprehensive cost of each communication tower product exported to the United States was about $5000, of which the cost of raw material procurement accounted for 40%, about $2000; The transportation cost accounts for 10%, approximately $500. After the implementation of the tariff policy, due to raw material suppliers raising prices by 15% to cope with tariff costs, the company's raw material procurement costs increased to $2300; During the transportation process, logistics companies also had to bear additional tariff risks and operating costs, resulting in a 20% increase in transportation costs to $600. In addition, the hidden cost increase caused by tariff policies in other links, such as the time and labor costs caused by the cumbersome customs clearance procedures, has led to a surge in the export cost of a single communication tower to over $5500, with a cost increase of more than 10%.
Such a significant increase in costs has severely squeezed the profit margins of enterprises. Assuming that the company originally exported a profit of $800 per communication tower to the United States, with a profit margin of 16%. After the cost increases, if the original selling price is maintained, the profit will drop to $300, and the profit margin will plummet to 5.5%, which poses a huge threat to the profitability and sustainable development of the enterprise. Many small and medium-sized enterprises may even fall into a loss making situation due to the inability to bear cost pressures, and have to reduce production scale or even exit the US market.
With the implementation of tariff policies, the price competitiveness of Chinese communication tower products in the US market has sharply declined, and their market share is facing the dilemma of being seized by competitors. In the past, Chinese communication towers, with their advantages of high quality and reasonable prices, occupied a certain market share in the United States and won the favor of many American communication operators. For example, in 2023, the market share of Chinese communication tower products in the United States is about 25%, ranking second only to domestic companies in the United States. However, after the tariff policy was introduced, the situation reversed. Due to the increase in tariffs, the prices of Chinese communication tower products have been forced to rise. In contrast, domestic communication tower companies in the United States and some competitors from other countries, such as South Korea and Japan, have gradually gained an advantage in terms of prices.
Some American telecommunications operators have started to reduce their orders for purchasing communication towers from China in order to control costs and instead seek other suppliers. According to industry data statistics, by 2024, the market share of Chinese communication tower products in the US market has dropped to 18%, and in just one year, the market share has shrunk by 7 percentage points. Taking AT&T, a large telecommunications operator in the United States, as an example, the number of communication towers it purchased from China in 2023 was 5000, but by 2024, this number had dropped to 3000, a decrease of 40%, and instead increased its procurement from Korean companies. The decline in market share not only affects the sales revenue and profits of Chinese communication tower enterprises, but also has a negative impact on their brand image and market reputation, further weakening their competitiveness in the international market.
The tariff policy has had a strong chain reaction on the upstream and downstream industrial chain of China's communication towers, causing a huge impact on the entire industrial ecosystem. In the upstream, many suppliers who provide raw materials for the manufacturing of communication towers, such as steel and aluminum suppliers, have significantly reduced their order volume. Taking a large steel enterprise located in Hebei as an example, it originally provided approximately 500000 tons of steel annually to communication tower manufacturing companies, of which 20% was supplied to communication tower companies exporting to the United States. With the implementation of US tariff policies, the export of these communication tower companies has been hindered, and they have reduced their production scale, resulting in an 80% decrease in the steel company's export related steel orders to the United States, only 20000 tons. The decrease in orders poses a crisis of overcapacity for upstream suppliers, forcing them to reduce production loads and even lay off employees to maintain the survival of the enterprise.
Downstream communication operators are also severely affected, as the rising cost of purchasing communication towers has led to a significant increase in the construction cost of communication networks. Verizon, a small telecommunications operator in a certain region of the United States, originally planned to build 1000 new communication towers in 2024 to expand its network coverage, with an estimated total investment of $50 million. However, due to the impact of tariffs, the procurement cost of communication towers has increased by 15%, resulting in a total investment of $57.5 million for the project. This exceeded the budget of the operator and had to postpone the project construction plan, reducing the number of new communication towers to 800, seriously affecting the construction progress and service quality of the communication network. The chain reaction of the entire industry chain has plunged the development of China's communication tower industry into unprecedented difficulties, seriously hindering the coordinated development of the industry.
Faced with the impact of US tariff policies, Chinese communication tower companies should actively expand overseas markets, achieve diversified market layouts, reduce dependence on a single market, and diversify risks. Although the European and American markets have been hindered by tariff policies, emerging markets such as Southeast Asia and Africa have shown enormous development potential. Taking Southeast Asia as an example, in recent years, with the rapid development of the economy and sustained population growth, the demand for communication infrastructure has shown explosive growth. As the largest economy in Southeast Asia with a population of over 270 million, Indonesia still needs to improve its communication network coverage, especially in remote areas where the problem of weak communication signals is more prominent. This provides a vast market space for Chinese communication tower enterprises.
In Africa, the construction of communication infrastructure is also in a stage of rapid development. According to data from the International Telecommunication Union (ITU), the number of mobile broadband users in Africa has been growing at a rate of over 20% annually in the past few years, and it is expected that by 2025, the number of mobile broadband users in Africa will reach over 500 million. Many African countries have formulated ambitious communication development plans, such as Kenya's plan to achieve 4G network coverage in over 90% of the country within the next 5 years, and Nigeria's commitment to promoting the pilot and construction of 5G networks. Chinese communication tower companies can actively participate in communication infrastructure construction projects in these countries by leveraging their advantages in technology, cost, and construction experience, establishing long-term and stable cooperative relationships with local operators, and sharing the dividends of local communication construction development.
Increasing investment in technological innovation and breaking through the key core technologies of communication towers are the key for Chinese communication tower enterprises to cope with tariff challenges and achieve sustainable development. In terms of material research and development, the new composite communication tower jointly developed by Harbin Institute of Technology and China Tower Heilongjiang Branch has achieved significant results. This communication tower is made of a new composite material composed of glass fiber and polyurethane resin. Compared with traditional steel materials, it has the characteristics of high strength, light weight, good insulation performance, low maintenance difficulty, and excellent corrosion resistance. By using production processes such as extrusion and winding to prepare composite materials into poles for communication tower construction, not only can transportation and installation costs be reduced, but construction cycles can also be shortened, further energy conservation and emission reduction can be achieved, and 5G green and low-carbon construction can be promoted.
In terms of communication technology innovation, Chinese enterprises are also constantly making efforts. For example, Huawei's Massive MIMO technology can significantly improve spectrum efficiency and system capacity by configuring large-scale antenna arrays on base stations, providing users with faster and more stable communication services. The application of this technology can effectively improve the communication efficiency of communication towers, reduce the demand for the number of communication towers, and thus lower construction and operation costs. Enterprises should also strengthen cooperation with universities and research institutions, establish a collaborative innovation mechanism between industry, academia, research and application, jointly tackle technological challenges, enhance their independent innovation capabilities and core competitiveness, and reduce dependence on external technology.
With the rapid development of emerging technologies such as 5G and the Internet of Things in China, Chinese communication tower companies have ushered in a golden development opportunity in the local market. According to data from the Ministry of Industry and Information Technology, by the end of 2024, China has built over 3 million 5G base stations, and the 5G network has covered all prefecture level cities and most county towns in the country. However, the construction of 5G networks is still ongoing, especially in rural and remote mountainous areas, where there is still significant room for improvement in 5G network coverage. At the same time, with the rise of the Internet of Things, the demand for communication towers in intelligent transportation, smart home, industrial Internet and other fields is also increasing.
Chinese communication tower enterprises should closely grasp the domestic market demand, strengthen deep cooperation with domestic operators, and jointly promote the construction and upgrading of communication towers. Taking China Tower as an example, the company has established long-term and stable cooperative relationships with operators such as China Mobile, China Unicom, and China Telecom. By sharing site resources and optimizing construction plans, the company has effectively reduced construction costs and improved construction efficiency. In the construction of 5G networks, China Tower fully leverages its resource advantages and professional capabilities to provide one-stop communication tower solutions for operators, including site planning, construction, maintenance and other services, effectively promoting the rapid deployment of 5G networks. Enterprises should also actively participate in the construction of domestic smart cities, digital villages and other projects, expand new space for the application of communication towers in urban management, agricultural production and other fields, consolidate their local market position, and provide solid support for the development of enterprises.
Although the US tariff policy has brought many challenges, the Chinese communication tower industry still has great potential for development with its strong strength and active and effective response strategies. In the context of rapid development of global communication technology, the market demand for communication towers as the infrastructure of communication networks will continue to grow. Chinese communication tower enterprises are expected to achieve breakthroughs in adversity, enhance international competitiveness, and make greater contributions to the development of the global communication industry through measures such as expanding overseas markets, strengthening technological innovation, and deepening local market cultivation. In the future, China's communication tower industry will continue to forge ahead in challenges and opportunities, writing even more brilliant chapters.
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