Chinese tariffs on US commodities after Phase One deal

Last week the world was treated to one of the most anticipated trade deals between China and the US. The world’s two most robust economies agreed to sign a ‘phase one’ agreement that is expected to ease tension in global markets.

In the “Phase One” deal, Washington slashed some tariffs on Chinese imports while Beijing cancelled retaliatory measures that would come to force on Dec. 15.

Before last week’s agreement, China had imposed an additional 10% duty on corn, sorghum, wheat, undenatured ethanol, and refined copper cathodes from the US. An additional 5% tariff would be imposed on propane, cotton, aluminium scrap, copper scrap and rare earth magnets.

However, with revised trading terms, tariffs have been reviewed on some commodities as highlighted below:

Crude Oil

Beginning Sep. 1, Beijing imposed a 5% tariff on crude shipments from the US. That was the first time China had placed a tax hike on the country’s oil exports. Nonetheless, the oil tariff remained unchanged even after the Phase One agreement.

China has significantly lowered crude oil import volumes from the US despite being the world’s largest importer and consumer of the commodity.

Data obtained by Reuters indicated that China had cut its imports by half, year-on-year to 146,275 barrels per day.

Scrap Metal

US aluminium scrap was set to enter the Chinese borders with an additional 5% tariff following the trade war. The tax, which would come to effect on Dec. 15, was shelved after the stage one deal.

But even before the additional 5% tariff, the commodity had already been affected by a separate 25% tariff in April and another in August last year.

Chinese shipments of the raw material from the US only dropped by 17.3% year-on-year by the end of October this year. However, copper exports to China crashed by 76.6% over time.

Pork

American pork exports will be subjected to total tariffs amounting to 72%. The percentage rose to that much after including the 12% ‘most-favoured-nation’ tariff. Still, the Phase One deal did not affect this tariff despite a promise by Beijing to increase pork imports from the US.

Rare Earths

Beginning June last year, Beijing slapped US rare earth ore exports to China with a 25% tariff. China has, however, removed the additional 5% tariff on th commodities, thanks to the Phase One deal.

The slashed tariffs came to effect immediately both parties signed the deal.