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As a result, China and the United States continue to reduce the risk of trade and commodity market friction. Although from the perspective of non-ferrous metal market, we believe that the impact is not substantial, but it is necessary to analyze the impact of trade part of Sino US trade friction and its impact on the balance sheet.

Through the escalating trade frictions, we believe that the trade frictions will not subside easily in the short term, and the probability rate will last for a long time. The impact of the period may be in the form of periodic pulse, which brings great uncertainty to the judgment of fundamental market.

The impact of Sino US trade war on China's aluminum industry mainly includes two aspects: one is the tariff imposed directly on imported aluminum products. Second, the additional tariff on imported goods has weakened China's domestic aluminum demand.

In today's globalized world, there are no winners in trade frictions. If they are united, they will benefit both, and if they fight, they will be hurt. The development of one belt, one road, and the other, the domestic industry and the overseas production capacity should be considered as a whole. The domestic industrial policies and international trade policies should be formed. Strategic adjustment of export destinations should be carried out, and the development of South Asia, Southeast Asia and Eastern Europe will be actively developed in line with the national "one belt and one way" development strategy.

As a result, China and the United States continue to reduce the risk of trade and commodity market friction. Although from the perspective of non-ferrous metal market, we believe that the impact is not substantial, but it is necessary to analyze the impact of trade part of Sino US trade friction and its impact on the balance sheet. Due to the influence of trade friction on aluminum industry chain in non-ferrous metal industry, this paper focuses on the analysis of aluminum industry chain. The following will be from the Sino US trade friction background and tracking, Sino US aluminum industry trade situation, the impact of Sino US aluminum industry trade friction and the impact of Sino US friction on various non-ferrous products.

1. Background and tracking of Sino US trade friction

At 0:01 U.S. Eastern time (12:01 Beijing time) on July 6, 2018, the U.S. government announced on schedule that it would levy the first batch of 818 tariff items with 34 billion commodities, and further solicit public opinions on the additional tariff measures for the remaining $16 billion goods. Earlier, trump said that if the Chinese government introduced corresponding tariff measures, the United States would impose additional tariffs on US $200 billion worth of Chinese goods at a rate of 10%; if China raised tariffs again to retaliate against the United States, the United States would also impose additional tariffs on new $200 billion worth of goods. Recently, the United States once again threatened to impose taxes on all US $500 billion of Chinese products exported to the United States. Moreover, the United States has also issued similar threats to its trading partners in other countries and regions. It can be seen that trade frictions will not subside easily in the short term, and the probability rate will last for a long time. The impact of the period may be in the form of periodic pulse, which will bring greater uncertainty to the judgment of fundamental market.

By tracking the trade protection measures of the United States in 2018, a wide range of trade products and various tariff protection measures are involved. From the perspective of trade products, it includes not only non-ferrous metals and other bulk industrial products, but also agricultural products, consumer goods and high-tech products. From the perspective of trade investigation involved, it includes "232" investigation, "332" investigation and "301" investigation.

Due to the impact of trade friction on aluminum industry chain in non-ferrous metal industry, the relevant impact of aluminum industry chain will be analyzed. Next, we will first introduce the investigation methods involved in various trade protection in the United States and their impact, so as to facilitate a better follow-up analysis of the impact on the trade flow of aluminum products.

(1) "232" investigation

Looking back on the additional tariffs imposed by the US on Chinese aluminum products, we should start with the "232" investigation. "232" investigation refers to the investigation on whether the import of specific products threatens the national security of the United States according to section 232 of the trade expansion act of 1962. The president of the United States makes a decision on whether to take final measures on the import of relevant products within 90 days after the report is submitted. "232" investigation has the characteristics of simple procedure, fast arbitration, various measures, and superimposed tariff with all other tax rates.

On January 1, 2018, the U.S. Department of Commerce released a 232 investigation report, proposing to impose at least 7.7% tariff on imported aluminum and 23.6% tariff on China. On March 1, 2018, trump announced that it would impose 25% and 10% tariffs on all imported steel and aluminum products. The overall tax rate on aluminum was raised to 10%, but the tax rate on Chinese products was reduced to 10%. However, it should be noted that the tariff is imposed in addition to all other tax rates.

Based on the "232" survey results report, the United States currently imposes a 10% tariff on aluminum products imported from all countries and regions except Australia, Brazil, Argentina and South Korea, involving raw aluminum, aluminum strip, aluminum foil, aluminum rod, aluminum profile and other major raw aluminum and primary aluminum processed products.

(2) Indirect impact

From the perspective of indirect impact, the total value of China's exports to the United States in 2017 was US $506 billion, including 26.9% of electronic products, 6.4% of medical equipment, and 4.5% of TV sets and monitors. These products need more or less the assembly of aluminum products. The United States will impose tariffs on these products exports, which may affect the export of such products, and then transmit to the aluminum industry, which may have a certain impact on the end consumption of electrolytic aluminum.

On the other hand, it is mainly reflected in the domestic macroeconomic impact. However, we believe that China has sufficient conditions to weaken the impact of trade war on domestic macro-economy. In terms of domestic aluminum consumption, aluminum terminal industry includes real estate construction, transportation, power, packaging and other industries. With the start of construction sites in real estate and infrastructure construction and the orderly progress of power grid construction since the beginning of the year, with the implementation of the national "Rural Revitalization Strategy" and the development trend of automobile lightweight, we expect that the real estate, infrastructure and automobile will still have a certain boosting effect on electrolytic aluminum consumption. In terms of automobiles, although the growth rate of automobile output is gradually slowing down, the growth of aluminum consumption for automobiles remains optimistic. First, the automobile production and sales volume in the case of high growth for many years, the year-on-year base has become larger: in 2017, the annual automobile output was 29.07 million, compared with 28 million in 2016, an increase of 1.07 million; and the second is the support of automobile lightweight for aluminum alloy demand growth, which makes the automobile The industry's demand for aluminum will continue to grow rapidly. Similarly, in the real estate sector, real estate development investment, new housing area and other data are still in stable growth, which will effectively boost the downstream consumption of aluminum.

From the perspective of consumption structure, different from Japan in 1980s, China has a unique population advantage. China has a consumption potential of more than 1.4 billion people. Even if it does not rely on export growth, China's economy can still maintain stable growth. Over the past 40 years of reform and opening up, industrialization has led to the rise of China's economy, but China's consumption has lagged behind. Encouraging domestic consumption not only allows Chinese people to share the fruits of economic growth, but also helps to deal with trade frictions and even trade wars in the United States. China has the potential to become a new consumption center in the world. Accelerating urbanization is one of the important ways to encourage consumption. At present, China's urbanization rate based on the permanent population is only 56.8%. In the next 30 years, more than 20-30% of China's population will settle in cities. The strong domestic consumption demand can reduce the dependence on foreign demand and bring reasonable and higher quality growth to the domestic economy. In order to transform China from a big export country to a big consumer country, China needs to adopt reform and innovation, such as urbanization, supply side structural reform, possible tax reduction, and liberalization of imports.