Limited Impacts from Extra 5% Tariffs

On August 23, 2019, the Customs Tariff Commission of the State Council issued the Announcement on Raising the Tariffs on Some Goods Originating in the U.S. According to the Announcement, China will impose 10% and 5% additional tariffs on the goods under 2 batches. Therein, the 10% additional tariffs and 5% additional tariffs will take effect from 12:01 am on September 1, 2019 and December 15, 2019 respectively. By that time, China will impose 31% tariffs on the U.S.-origin propane resources.

Before the Sino-U.S. trade war, China only imposed 1% of tariff on the U.S.-origin propane resources. In 2017, China imported 3,375kt of propane from the U.S., taking up about 25% of the total and ranking second.

After the trade war, the tariff increased to 26%, and there were few the U.S.-origin resources in China’s LPG import market. From January to July 2019, China imported 8,531.1kt of propane resources, and the U.A.E., Quarter, Kuwait, Saudi Arabia and Oman were major origins. Besides, China only imported 2,443mt of propane resources from the U.S., taking the 22nd place.

The quite high cost hindered the U.S.-origin resources. In 2017, the import prices of the U.S.-origin resources averaged $521.79/mt, which was the highest. Up to H1, 2018, the average import price of the U.S.-origin resources reached $600/mt. Given the 26% of tariffs, the importers needed to pay the tariff about $130/mt.

After December 15, 2019, China will impose 31% of tariffs on the U.S.-origin propane resources, lifting the import cost. Considering that there are few the U.S.-origin resources in China’s LPG market, the extra 5% tariffs may exert limited impacts on China’s propane prices.





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