The US and China have agreed on Friday to suspend a new round of tariffs that they had planned to impose on each other on 15 December.
In addition, the US will lower tariffs to 7.5% from 15% on $120bn worth of goods, according to both President Donald Trump and the US Trade Representative (USTR). The US imposed those tariffs on 1 September as part 1 in the fourth round of tariffs. Part 2 of the fourth round of tariffs were to be imposed on 15 December, and they are now off the table.
China had retaliated with its own fourth round of tariffs, also divided into two parts. Under it, China added new tariffs on some products and increased existing ones on other products. It is unclear if China had agreed to lower or roll back part 1 of its fourth round of tariffs. .
Nonetheless, the suspension of the planned 15 December tariffs brings some relief to the US and Chinese manufacturing and chemical sectors, which have been weighed down by the trade war.
US chemical exports of $136.7bn in 2019 are set to decline 2.5% from 2018, before ticking up 1.1% to $138.2m in 2020, according to the American Chemistry Council (ACC). Imports are also set to decline by 3.9% to $104.8bn in 2019 before rising 1.2% to $138.2bn in 2020, according to the ACC.
“The export side has been hit significantly with China’s retaliatory tariffs and the slowdown in global manufacturing,” said Martha Moore, senior director - policy analysis and economics at the ACC, at a 5 December press briefing.
For commodity chemicals and polymers, China would have slapped new 10% tariffs on US low density polyethylene (LDPE), polyvinyl chloride (PVC), polycarbonate (PC), caprolactam and phthalic anhydride on 15 December. Those are now off the table.
