China’s Ministry of Finance on Wednesday announced its intention to increase tariffs on 106 US-origin products by an additional 25%, with nearly half of the list comprising industrial and chemical raw materials.
The measures, which have not yet been instated, were announced in retaliation to additional tariff measures unveiled by the US on Tuesday setting out additional 25% tariffs for 1,333 products from China, covering the aerospace, information technology and machinery sectors.
Where the US tariffs were spread across a diverse spread of products, worth a collective $50bn in imports, China intends to levy $48bn-worth of hikes on a product list less than 10% of the size.
“Such unilateral… and protectionist action has gravely violated fundamental principles and values of the WTO. It serves neither China’s interest, nor US interest, even less the interest of the global economy,” said China’s embassy to the US in a statement.
“As the Chinese saying goes, it is only polite to reciprocate,” it added.
The Office of the US trade Representative said on Tuesday that the measures were a response “to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.”
China is the third-largest export market for the US after Canada and Mexico, and three of the sectors targeted – soybeans, aerospace and passenger cars – represent the three most significant sectors for US firms selling to China, according to US Census Data. Of the $48bn in targeted US-origin exports, nearly $40bn are represented by those three sectors.
Aside from the potential impact on chemicals markets, the ramifications for agriculture, which sent global soy and corn futures prices into a spiral in Wednesday trading, could have a significant effect on fertilizers producers if China pushes ahead with the measures.
The DJ Euro Stoxx chemicals index had fallen by nearly 2% from Tuesday’s close as of 12:59 GMT on Wednesday, with fertilizer producers and players with significant exposure to the automotive sectors suffering the most protracted slumps.
Shares in K+S and Yara had fallen by around 2.3% compared to Tuesday’s close, while LANXESS stock fell 2.32% over the same period.
The UK’s FTSE 100 index dropped by 0.42% compared to Tuesday’s close as of 13:21 GMT, while Germany’s DAX dropped by 1.17% and France’s CAC 40 slumped 0.85%.
The escalating friction between the two biggest economies is expected to boost prices of a range of products beyond those in the lists, industry sources said.
China’s response has raised fears of a global trade war, but US President Donald Trump, who said last month that trade wars are “easy to win”, stated on Wednesday that China had already won the battle.
“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US. Now we have a Trade Deficit of $500bn a year, with Intellectual Property Theft of another $300bn. We cannot let this continue,” he said.
|HS code||product description|
|39074000||Primary shape polycarbonate|
|38151200||Supported catalysts with noble metals and their compounds as actives|
|38220010||Diagnostic or experimental reagents attached to the backing, except those under tarriff code of 32.02,32.06|
|38249999||Other chemicals and chemical products that are not listed in other tariff codes|
|38248700||products listed in Note 3 of this Chapter's sub-chapter containing perfluorooctane sulfonic acid and its salts, perfluorooctyl sulfonamide or perfluorooctane sulfonyl chloride|
|38248800||products listed in Note 3 of this Chapter containing four, five, six, seven or octabromodiphenyl ethers|
|38248500||Contains 1,2,3,4,5,6-HCH (6,6,6) (ISO), including lindane (ISO, INN)|
|38249100||Mainly from dimethyl (5-ethyl-2-methyl-2oxo-1,3,2-dioxaphosphorin-5-yl)methylphosphonate and double [(5-ethyl- Mixtures and products of 2-methyl-2oxo-1,3,2-dioxaphosphorin-5-yl)methyl]methylphosphonate (FRC-1)|
|38248600||products listed in Note 3 of this Chapter containing PeCB (ISO) or Hexachlorobenzene (ISO)|
|38248400||Contains aldrin (ISO), toxaphene (ISO), chlordane (ISO), chlordecone (ISO), DDT (ISO) [Diptrix (INN), 1,1,1-trichloro-2,2 - Bis(4-chlorophenyl)ethane], Dieldrin (ISO, INN), Endosulfan (ISO), Endrin (ISO), Heptachlor (ISO), or Mirex (ISO), products listed in Note 3 of this Chapter|
|38151900||Other carrier catalysts|
|38159000||Other unrepresented reaction initiators, accelerators|
|39011000||Polyethylene with a primary shape specific gravity < 0.94|
|34039900||Lubricants (exclude petroleum or oil extracted from bituminous minerals)|
|38220090||Whether or not attached to a diagnostic or experimental formulation reagent on the backing, except items under tariff code 32.02,32.06|
|38112900||Lubricating oil additive without oil or oil extracted from bituminous minerals|
|39073000||Primary shape epoxy|
|39206200||Polyethylene terephthalate sheet foil flat strip|
|39199090||Other self-adhesive plastic plates, sheets, films and other materials|
|39209990||Other plastic non-foam plastic sheets|
|39269090||Other plastic products|
|39019090||Other primary shape ethylene polymers|
|39014090||Other ethylene-α-olefin copolymers, specific gravity less than 0.94|
|39069090||Other primary shape acrylic polymers|
|39041090||Other primary shapes of pure polyvinyl chloride|
|39119000||Other primary polysulfides, polysulfones, and other new products not specified in other code in Note 3 to Chapter 39|
|39219090||Unlisted Plastic Plates, Sheets, Films, Foil and Strips|
|40023990||Halogenated butyl rubber sheet, sheet, tape|
|29349990||Other heterocyclic compounds|
|35069190||Adhesives based on other rubber or plastics|
|39072090||Other primary-shaped polyethers|
|39121100||Primary-shaped, unplasticized cellulose acetate|
|39089010||Aromatic polyamides and their copolymers|
|39089020||Semi-aromatic polyamides and their copolymers|
|39089090||Primary polyamides of other shapes|
|39201090||Other vinyl polymer plates, sheets, tapes|
|34021300||Non-ionic organic surfactants|
|34031900||Lubricants (containing oil or oil extracted from bituminous minerals and <70% by weight)|