Certain ferts imports to face higher US tariffs: Update

Updates story with market reaction and impact.

The latest round of US tariff rates will affect a large swath of fertilizer exporters to the US starting 7 August, while keeping levies for some key countries stable at 10pc.

In the new tariffs released by President Donald Trump Thursday night, most fertilizer origin countries had their rates increase to 15pc from the prior 10pc imposed in April (see table), including Trinidad and Tobago, Nigeria, Israel and Jordan, among others.

Some countries saw rates set above 15pc, like key urea supplier Algeria, which now faces a 30pc tariff. But countries not detailed in Annex I of the order will continue to face a 10pc levy, notably Arab Gulf nations like Saudi Arabia and Qatar. That should also maintain Russia's current tariff-exempt status.

Goods that are loaded onto ships before 7 August and enter the US before 5 October will not be subject to the new tariffs, the administration said.

The executive order did not outline any adjustment to product exemptions under the tariff rates, meaning fertilizers like potash (MOP, SOP and NOP) and NPKs, among others, will likely remain tariff-free.

Exemptions for US-Mexico-Canada Agreement (USMCA) compliant goods remain in place for both countries, consistent with negotiated deals from early April. The exemptions include most fertilizers such as nitrogen and potash, as well as related products. Sulfur, sulfuric acid and ammonia are also considered USMCA compliant, though some uncertainty remains related to whether phosphates produced in Mexico are exempt because of the origin of the products' inputs.

Tariffs on non-USMCA compliant Mexican goods were unchanged at 25pc following a 90-day extension on 31 July and levies on imports from Canada that are not USMCA compliant rose to 35pc on 1 August.

New tariffs met with limited price response

Market reactions to the tariff announcement this week have been subdued so far, and the tariffs' impact will largely be relegated to nitrogen and phosphate markets.

New Orleans (Nola) urea barges traded sideways the morning after the executive order was issued as liquidity picked up in the market. At least 15,000st September delivering barges at Nola traded from $460-462/st fob. An August barge changed hands at $458/st fob, in line with Argus' daily urea assessment on 31 July. Meanwhile, a September DAP barge traded at $805/st fob Nola Friday, equal to September barges earlier in the week.

Most nitrogen exporters issued higher tariffs were already choosing not to ship product to the US because of the 10pc tariff imposed in April and tightness in global markets. Still, one exception is Trinidad & Tobago, which has continued to ship UAN and ammonia to the US. The 5pc increase in the island nation's rate could cause sellers to divert more supplies away from the US.

For phosphate, nearly all offshore suppliers issued a tariff in early April chose to deter product from US shores, causing severe supply tightness in the domestic market. Aside from minimal TSP shipments from Israel, major DAP and MAP global producers have chosen to send product elsewhere and see the tariff uncertainty as too sensitive to tangle with.

Nitrogen imports consumed for the fall application season will likely be unaffected by the additional levies because of the grace period for goods entering the US before 7 October.

The new tariffs will become more meaningful if they remain in place leading up to the spring season. Fertilizer imports ramp up through the winter and into spring, requiring distributors to pull on volumes from a wider array of countries, including several now facing higher levies.