In early March, the U.S. Trade Representative (USTR) released a proposed list of 1,300 products that would be subject to an additional 25 percent tariff duty rate when imported from China. As importers of chemical products from China, many NACD members have told us about the impact the tariffs will have on them if implemented. These tariffs, commonly known as the Section 301 China tariffs, would result in an overall $50 billion price tag that will be passed directly on to the U.S. consumer in the form of higher product prices.
Less than a month later, the Chinese government announced they are placing tariffs on 128 U.S. products in retaliation, setting the stage for a back and forth escalation.
The products included on the Section 301 list vary from industrial goods such as engine parts to common consumer healthcare items like defibrillators. By our count, 86 items are chemical products and about half of those are regularly imported by U.S. chemical distributors. According to an analysis by John Dunham & Associates commissioned by NACD, the implementation of the tariffs could result in an additional $26 million dollars paid in duties by U.S. chemical distributors.
For those of you that wish to avoid the tariffs by switching to a new supplier in a different country, the path is not easy. If you currently source products from China, you will have to take considerable time and effort to develop relationships, conduct due diligence and establish business terms even before the first shipment from your new supplier can take place.
Unfortunately, the chemical distribution industry is already being impacted by the administration’s trade agenda. The Department of Commerce’s Section 232 tariffs of 10 percent on aluminum and 25 percent on steel which went into effect on March 23 have driven up prices on steel equipment including valves, pumps, drums and other contact parts frequently used by distributors. Furthermore, in early April the President instructed the USTR to consider adding an additional $100 billion in tariffs on top of the ones already proposed.
To address these impacts, NACD and over 100 other trade associations signed on to a letter to the U.S. House of Representatives Ways & Means Committee urging Congress to find a way to mitigate the Section 301 tariffs and to seek alternatives to address the unfair Chinese trade practices that the tariffs are meant to target. Tariffs are ultimately taxes on the U.S. consumer, and we remain committed to seeking alternatives to the tariffs currently proposed.