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US tariffs on chemicals: Trump's orders disrupt supply chains

04 Feb '25
2 min read
US tariffs on chemicals: Trump's orders disrupt supply chains
Pic: Adobe Stock

Insights

  • President Trump announced tariffs of 25 per cent on imports from Canada and Mexico and 10 per cent on Chinese goods, impacting chemical supply chains.
  • A 30-day pause was negotiated by Canadian and Mexican leaders.
  • India, excluded from the tariffs, has lowered duties on key US exports, eyeing trade benefits.
  • The move may open opportunities for India, South Korea, and Japan.

On Saturday, President Donald Trump announced a 25 per cent tariff on imports from Canada and Mexico, alongside a 10 per cent tariff on goods from China. Canadian energy resources were subject to a lower 10 per cent tariff. No specific industry exemptions were included in the new tariffs, which were set to take effect on February 4, 2025. Trump’s order did not specify when the tariffs would be removed. But the Mexican President and the Canadian Prime Minister have been able to convince President Trump on pausing the imposition of the tariffs for 30 days.

It is important to note that China, Mexico, and Canada are the US’s three largest trading partners. Interestingly, despite his frequent criticism of India’s tariff structure, Trump’s February 1 executive order did not include India, suggesting that bilateral trade negotiations may occur later this month, coinciding with Prime Minister Narendra Modi’s visit to the US.

International trade experts point out that India has already begun reducing tariffs on items mainly exported by the US as a strategy to avoid being targeted by Trump’s tariffs. The Union Budget for 2025-26, presented also on Saturday, included cuts to duties on goods such as motorcycles with engine capacities under 1,600cc, ground satellite installations, and synthetic flavouring agents. In the meantime, exporters noted that the 10 per cent tariffs on Chinese goods could create new opportunities for Indian products to enter the US market. According to an Oxford Economics analysis, India was the fourth-largest beneficiary of trade diversions that occurred between 2017-2023 following Trump’s trade war with China.

As per 2023, China, Canada and Mexico played a significant role in exporting chemicals to the US and a blanket tariff on all the industries, including chemicals, will make it harder for the US businesses to procure these items from these countries.

Being the top trade partner for chemicals, the top products being exported by the 3 countries to the US are as below:
It is yet to be seen whether other Asian nations like India, South Korea and Japan would be able to take some advantage of it, as European Union is also expecting a set of tariffs being levied by the US.

Fibre2Fashion News Desk (DL)

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