Earlier this month, President Trump announced via Twitter that he will impose a 10% Tariff on all remaining imports from China. This escalation of the trade war is in response to the Chinese not keeping their promise to purchase U.S. agricultural products, as well as stop the sale of Fentanyl into the U.S. These tariffs would be in addition to the already levied 25% tariff on $250 billion worth of goods.
The stock market and many industry associations reacted negatively to the announcement. China also responded by devaluing its currency to its lowest level in over a decade and put a halt on purchases of U.S. agricultural goods. President Trump has also threatened to raise tariff levels to 25% on more goods from China. These signs indicate further deterioration of trade negotiations between the two countries, and those hopeful for a quick resolution of this trade war are losing optimism.
Since the tariffs began, many companies have been operating under the assumption that the situation would be temporary. Many decided to eat the costs of the tariffs rather than increase the cost of their finished products or qualify alternative supply chains. With the current state of things, companies should begin to prepare for the tariffs to remain in effect for the foreseeable future.
This may mean consumers in the U.S. could soon see price increases on many goods. In particular, buyers of many raw materials that are primarily sourced from China such as lubricant additives like Sebacic Acid, will have no choice but to continue buying the Chinese goods at a higher price. This is because the overall global market does not have enough capacity to replace the Chinese market. Some companies are exploring alternative supply chains but continue to buy Chinese material as their labs work on the approval and testing of new raw materials sources. This can sometimes be a long arduous process including aging tests that can take years to complete.
ChemCeed continues to offer customers options for supply chain alternatives and has samples on hand for qualifications purposes. If you are considering making a change, please ask your sales representative for more information.
UPDATE: The United States Trade Representative office announced on August 12th that new tariffs on certain consumer items would be delayed until Dec. 15, while other products would be removed from the new China tariff list. It cited health and security factors. Numerous chemical materials were included on the listed of delayed tariffs.