Overview of the US-China Trade War and its impact on import of Fertilizers
Prashant Kumar Patel
Lead Procurement I Supply chain optimization I Global sourcing I Change Management I Cost leadership I 40 Under 40 I Operational efficiency | Learner
Recent news has revealed that the US is increasing tariffs on Chinese goods, marking a significant development in the ongoing trade dispute between the two economic powerhouses.
The News:
The US has officially announced plans to impose higher tariffs on various Chinese products. These tariffs will be implemented starting on August 24 under Section 301 of the Trade Act of 1974. The details include an increase in tariffs on items such as electric vehicles (EVs), lithium-ion EV batteries, photovoltaic cells for solar panels, critical minerals, ship-to-shore cranes, syringes, needles, and personal protective equipment (PPE).????????????????????????????????????????? (details in annex I)
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Reasons Behind the hike on imports Tariff:
Several reasons have been highlighted for this tariff hike, including the significant trade gap between the US and China, estimated intellectual property theft by China, and concerns about the undervaluation of the Chinese yuan against the US dollar, leading to trade imbalances.
·?????? Trade Gap: The United States imported $427 billion in goods from China in 2023 and exported $148 billion to the world's No 2 economy, according to the U.S. Census Bureau, a trade gap that has persisted for decades and become an ever more sensitive subject in Washington.
·?????? Protection of US Intellectual Property: US Trade Representative Katherine Tai has said the revised tariffs were justified because China was stealing US intellectual property.
·?????? Under valuation of RMB: The RMB was 16% undervalued against the dollar, contributing to China’s high exports and trade surplus.
Impact on India: Surge in freight, increased lead time
The rise in demand from US and EU importers for Chinese goods may lead to increased sea freight costs and vessel/container availability challenges, impacting India's trade routes.
·?????? It’s expected that the US and EU importers will have steep rise in imports from China in June to Aug months (as from Aug 24, new/higher tariff rate will be applicable on Chinese goods). This will impact the sea freight, Vessel/container availability.
·?????? Already due to Red Sea issue, Shipping lines are taking longer voyage time (approx. 15 days more) in China to US route. This is resulting in capturing of more vessel/container in same route and less availability in China-India route.
·?????? There is surge in shipping freights more than 3 times than regular fare within 3 weeks.
·?????? Also, there is an increase in the lead time of supply by 6-8 weeks.
Impact on Fertilizer :
Due to issues such as delays in shipments from China to India, longer voyage times, and disruptions in shipping lines, India is facing delayed arrival of essential goods like fertilizers.
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·?????? It is observed delay in all shipments from China to India; reason being the shipments are held up with shipping line and the supplier is not getting vessel/container.
·?????? In India, normal monsoon is expected, companies don’t have much stock in their hand, demand from market is expected to be higher.
·?????? The price of fertilizer will increase rapidly in next few days/weeks.
Sources:
Annex I
List of Chinese goods under additional tariffs in the United States
Sources: United States, and Polymerupdate Research
Procurement at PCBL Chemicals, an energy-driven professional seeking challenging assignments in Resiliency to tight materials, Strategic Global Procurement, Project Management, People Management
9 个月Very informative article.