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China targets US propane in import tariff plans

04 Apr 2018 10:46 (+01:00 GMT)
China targets US propane in import tariff plans

Singapore, 4 April (Argus) — China is planning to impose 25pc tariffs on 106 items imported from the US, including propane and some petrochemical products, as trade tensions between the two countries continue.

China's finance ministry announced the plans for the new tariffs today, shortly after the US Trade Representative's (USTR) office published a list of Chinese import items it wants to tax at a higher rate following a directive from President Donald Trump last month.

The proposed new taxes cover propane, and could have a major impact on growing US exports to China. The US exported 3.37mn t of propane to China last year, GTIS data show. This accounted for 25pc of China's total propane imports of 13.35mn t, according to Chinese customs data. Total US LPG exports to China rose to 3.5mn t last year from 2.8mn t in 2016.

China currently imposes only a 1pc import tax on LPG from all sources, indicating a 25pc tariff on US imports could have a significant impact on the country's supplies.

Some grades of polyethylene and other chemicals are also covered by the tariffs, but major trade products appear not to be included.

Imports of the 106 items identified by China are valued at $50bn/yr, the same amount as the products targeted by the US. The finance ministry's list also includes some cars, aircraft, soybeans and other agricultural products, which make up a significant and high-profile portion of US exports to China.

The USTR tariff plans violate World Trade Organisation rules and China's interests, and threaten the country's development interests, the finance ministry said. The implementation date of China's new tariffs will be announced separately, it added.

A parallel move by the US to single out China's exports of steel and aluminium for higher tariffs has already prompted Beijing to hike tariffs on US ethanol and 127 other mostly agricultural goods.