According to John Dunham & Associates, conducted analysis on a proposed tariffs hike by the US noted that US chemical distributors would face a cost increase of US$1.277bn if the US moves forward with its third round of tariffs on imports from China. The latest round would impose a 25% tariff on US$200bn in products imported from China, as proposed by the US Trade Representative (USTR).
In 2017, the US imported US$5.109bn of chemicals and polymers from China, Macau and Hong Kong that would be subject to these tariffs, the study observed. These represented 8.7% of the total US imports of these products. Once freight and insurance charges are deducted, that would bring the product value of these imports to US$4.857bn. If a 25% tariff is imposed on this value, it would amount to a price increase of US$1.214bn.
Adding a transportation margin brings the cost to US$1.277bn, which would be the increased cost facing chemical distributors.
Thus, the cost of the tariff would lead to a 5.3% increase on the price of chemicals if evenly distributed across the market. That is an average of US$18.69 per ton or US$20.69 per ton at the purchaser level.
