China's Import-Export Tariff Adjustments and its Impact on Global Trade

In a significant move to align with the new development concept and propel the construction of a new development pattern, the State Council of the People's Republic of China has declared adjustments to import and export tariffs, effective January 1, 2024. The announcement, made on Wednesday, December 20, 2023, by the Customs Tariff Commission of the State Council, aims to support high-quality development, innovation patterns, and the advanced manufacturing industry.

Tariff quota management will continue to be implemented for eight categories of commodities including wheat, and the tax rates will remain unchanged. Among them, the quota tax rate for three types of chemical fertilizers: urea, compound fertilizer, and ammonium hydrogen phosphate will continue to implement a tentative tax rate of 1%. Continue to implement sliding tariffs on a certain amount of cotton imported outside the quota.

According to the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Nicaragua (hereinafter referred to as the Comprehensive Agreement), the tariff rates in the first year of the agreement will be implemented on some imported goods originating in Nicaragua. The early harvest tariff concessions of the China-Nicaragua Free Trade Agreement will be incorporated into the comprehensive agreement for implementation. When the most-favoured-nation tax rate is lower than or equal to the agreement rate, if there is a provision in the agreement, the provisions of the relevant agreement shall apply; if there is no provision in the agreement, the lower one shall apply.

The announcement emphasizes the continuation of sliding tariffs on a designated amount of cotton imported outside the quota. The adjustments also account for existing free trade agreements and preferential trade arrangements, with reduced taxes on imports from countries such as New Zealand, Peru, Costa Rica, Switzerland, Iceland, South Korea, Australia, Pakistan, Mauritius, and Cambodia. The Asia-Pacific Trade Agreement, the "Cross-Strait Economic Cooperation Framework Agreement" (ECFA), and others will continue to be implemented. Notably, zero-tariff treatment will be sustained for 43 least developed countries, with Vanuatu no longer included. Export tariffs will persist for 107 commodities, including ferrochrome, with provisional export tariffs for 68 items. Detailed information on tariff adjustments and applicable items can be found in the provided appendices. These measures are poised to shape China's economic landscape, addressing domestic supply and demand while fostering international trade relationships.

The recent announcement of import and export tariff adjustments in China is poised to significantly influence the chemical commodities market, with potential repercussions for key substances such as ethylene, propylene, and liquid crystal glass substrates below 6 generations. The tariff alterations may pose challenges for overseas traders in procuring materials, potentially prompting a shift in demand to other regions. Tariff increases on specific chemicals, driven by domestic demands, could elevate import costs, subsequently leading to higher prices for these commodities within the domestic market. Conversely, tariff waivers for essential medical goods, including pharmaceutical raw materials, might positively impact the chemical sector by reducing production costs for medical manufacturers, potentially resulting in stable or lower prices for medical products. The introduction of a provisional import tax rate for numerous commodities introduces market uncertainty, potentially causing price fluctuations as businesses adapt to the new tax structures. The continuation of sliding tariffs on cotton may impact textile and chemical industries, potentially increasing costs for those reliant on imported cotton. On a positive note, reduced taxes on chemical imports from countries with free trade agreements may contribute to more competitive pricing, benefiting industries dependent on these imported chemicals. Overall, these tariff adjustments are set to reshape the landscape of the chemical commodities market, influencing prices and supply dynamics in various sectors.

Source:Chemanalyst