Trump's Tariff Policies
In the face of ongoing US tariffs, ChemChina, a leading Chinese chemical company, has asserted that its overseas business spans over 80 countries and regions, and the recent tariff adjustments have minimal impact on the company at present.
The US, being one of the world's largest importers of laboratory equipment and reagents, has seen a reduction in imports due to the tariffs, potentially leading to a domestic supply gap in China. This could result in an increase in product prices within the country.
Kai Pflug, an expert from Management Consulting - Chemicals, believes that while the tariffs may cause some pain for the Chinese chemical industry, they are not expected to be catastrophic. He further adds that the tariffs will bring about some benefits, such as the potential for MTO (methanol-to-olefin) technologies to benefit from the changed raw materials costs.
China, in turn, has made significant strides in establishing its domestic chemical value chains, and the Chinese chemical industry is responding to the tariffs with various strategies. One such response is the use of asymmetric tariff policies, favouring exports while effectively blocking foreign specialty chemicals through technical standards and approval procedures. This approach serves as a geopolitical tool to protect and promote domestic industry against the tariffs imposed by the US government.
The current tariffs on imports of chemicals from China to the US stand at 145%, a substantial barrier to exporting chemicals from China to the US. This has led to a sharp increase in the prices of US scientific research equipment and supplies in the new tariff environment.
Exports to the US account for approximately 10% of China's chemical exports and 1% of China's total chemical sales. Despite this, ChemChina's overseas business remains unaffected thus far.
The US tax increase on chemical products has a negative impact, and the tariffs are indeed a massive obstacle to exporting chemicals from China to the US. In response, Chinese chemical companies and media are making defiant statements, with many claiming that the tariffs will mainly hurt the US.
However, China's countermeasures may bring benefits to some chemical products by increasing domestic price levels, as some chemical products may be produced by different methods due to changes in raw materials costs. The 34% tariffs on ethylene imports to China, for instance, will increase costs by 3-5%.
As the trade tensions continue, the Chinese chemical industry is adapting and finding ways to navigate the challenging tariff landscape, ensuring the continued growth and success of the sector in the global market.
