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10 Feb 2025
Who Really Gets Hurt by the U.S. Tariff Hike on Chinese Chemicals?
Keywords
On February 1, former U.S. President Donald Trump signed an executive order imposing a 10% tariff on Chinese imports and a 25% tariff on goods from Mexico and Canada.
On November 25, 2024, following his re-election, Trump escalated his protectionist rhetoric on social media, vowing to impose a 10-20% tariff on all foreign imports and a 60% tariff on Chinese goods. The targeted product categories include chemicals, apparel, toys, furniture, appliances, footwear, and travel goods.
Impact on China's Chemical Exports
The Trump administration had previously imposed tariffs on Chinese chemical products under Section 301, and this new 10% tariff increase is expected to further disrupt China's chemical exports. As the world's largest chemical producer, China supplies a significant portion of its MDI (Methylene Diphenyl Diisocyanate) exports to the U.S.
Key Data:
- China's total polymeric MDI exports in 2024: 1.2 million tons (+15.38% YoY)
- Exports to the U.S.: 268,000 tons (22% of total exports)
- The U.S. remains China's largest single export destination, surpassing the Netherlands, the second-largest importer.
Can Tariffs Revive the U.S. Chemical Industry?
The American Chemistry Council (ACC) projects a 0.4% decline in U.S. chemical production in 2024, followed by modest growth of 1.9% in 2025. The downturn is particularly evident in:
- Specialty chemicals (-3.2%)
- Basic chemicals (-1.5%)
- Key impacted sectors: Construction coatings and automotive chemicals
While the global chemical industry is shifting toward Asia, with the region now accounting for over 50% of the global specialty chemicals market, the U.S. trade war could further escalate operational costs for domestic manufacturers and undermine growth potential.
Who Takes the Bigger Hit?
U.S. Chemical Trade Balance (2023):
- $30 billion trade surplus
- 44% of U.S. chemical exports go to Canada, Mexico, and China
- Top import sources: Canada (18%) & China (9%)
Despite being an important market for China, the U.S. is not China's largest chemical export destination. In 2024, the EU became China's top chemical trading partner, both in imports and exports, surpassing the U.S.
Trade Flow Comparison (2024)
- China's chemical imports from the U.S.: ¥146.9 billion
- China's chemical exports to the U.S.: ¥128.34 billion
Strategic Shifts & Market Adjustments
The U.S. tariffs will disrupt existing trade dynamics, leading to higher cross-border supply chain costs. However, it will also accelerate China's import substitution efforts, reducing its reliance on U.S. chemicals.
Disclaimer: Blooming reserves the right of final explanation and
revision for all the information.