On Friday, April 19th, the Chinese Communist Party imposed tariffs on a commonly used chemical imported from the United States, the latest sign of escalating trade tensions between China and the US.
The Chinese Ministry of Commerce announced that starting from Saturday, April 20th, a 43.5% tariff will be levied on the imported acetic acid manufactured in the United States, citing reasons of low-price dumping.
On Wednesday, President Biden called for higher tariffs on Chinese steel, and the US initiated anti-dumping investigations into China’s shipbuilding, maritime, and logistics industries. Treasury Secretary Yellen stated that due to China’s continuously expanding industrial capacity and generous subsidies to its manufacturing sector, artificially low-priced Chinese goods are flooding the global market, threatening employment opportunities in the US.
The Chinese Ministry of Commerce firmly stated on Thursday its opposition to the US tariffs and vowed to take all necessary measures to safeguard its own interests.
Acetic acid is a chemical commonly added to animal feed to prevent mold, and also used in insecticides, herbicides, and pharmaceutical development. Dow Chemical Company and Eastman Chemical Company are the two US companies under investigation by China for alleged dumping practices.
According to market research firm Straits Research, the global acetic acid market is relatively small, valued at around $1.3 billion by 2022, with China accounting for approximately a quarter of global consumption.
Dow Chemical and Eastman are among the few major producers in Europe and the US.
According to the credit rating agency S&P Global’s 2023 report, the German chemical giant BASF is the only Western company producing acetic acid in China, operating a joint venture with a local company.
According to Chinese customs data, China’s imports of acetic acid from the US reached a peak in 2020 at around 35,000 tons, valued at approximately $26 million. This number dropped to 12,500 tons last year.
Rory Green, Chief China Economist at London-based GlobalData TS Lombard, mentioned that the US-China trade relations are experiencing periodic downturns, partly due to pre-election competition before the November election in the US, where trade with China is expected to be a flashpoint.
The Wall Street Journal views the tariffs imposed by China on Friday as one of a series of smaller measures taken by both sides in a broader trade war.
Political commentator Li Lin believes that the Chinese government’s actions can be seen as retaliation since the Biden administration had just prepared to increase tariffs on Chinese steel. Even though China may not admit it, this move appears to be a response. With the US election approaching in November, both the Biden administration and Trump are expected to take a tougher stance on Chinese goods. If China continues to retaliate, it will surely face scrutiny from US lawmakers, leading to more sanctions imposed by the US. The US-China trade war is expected to become more intense, and in the long run, China’s actions may not be worth the consequences.
Last year, China placed some US arms manufacturers on a list of “unreliable entities” prohibited from trading with China. In May of last year, China cited national security concerns to ban large Chinese corporations from buying products from Micron Technology.
In 2023, the US initiated anti-subsidy investigations on aluminum, glass bottles, and paper shopping bags from China, and imposed tariffs on Chinese-made internal combustion high-pressure washers.
On a global scale, since the beginning of this year, over 70 measures targeting Chinese imports have been announced by various governments, surpassing 50 measures in both 2021 and 2022.
The European Union has complained about Beijing dumping cheap electric cars in the European market and is considering imposing retaliatory tariffs.
The UK has expressed concerns about a large influx of Chinese tractors and construction machinery and has launched anti-dumping investigations. Additionally, it has raised complaints about electric bicycles.
Brazil, India, Indonesia, Chile, and Mexico have lodged complaints against China for dumping practices in steel, ceramics, and chemicals.
Chile is considering imposing a 15% tariff on Chinese steel. India has launched anti-dumping investigations on Chinese bolts, mirrors, and vacuum flasks. Indonesia has taken similar measures on Chinese synthetic yarn, citing a dangerous influx of Chinese products threatening its domestic industries.