US to proceed on Mexican, Canadian tariffs; raise China rate by another 10%

HOUSTON (ICIS)–The US will proceed with its proposed 25% tariffs on most goods from Canada and Mexico, and the nation will increase tariffs on imports from China by another 10%, all effective on 4 March, the president said on Thursday.

In addition, the US will proceed with its proposed reciprocal tariffs on 2 April, President Donald Trump said on social media.

The 4 March date still leaves time for the US to reach some agreement with Canada or Mexico to cancel or delay the proposed tariffs.

The US agreed to a 30-day delay with Canada and Mexico on 3 February, the day before it had initially planned to impose the tariffs.

On Wednesday, 26 February, Mexico’s president said such an agreement was in the works.

No agreement was reached with China, so the 10% tariffs went into effect.

China retaliated by imposing tariffs on US imports of coal, liquefied natural gas (LNG), crude oil, farm equipment and some vehicles.

RATIONAL FOR THE TARIFFS
The US will proceed with the tariffs, because Trump said illegal drugs that are made in China continue to enter the country from Canada and Mexico.

“Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels. A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China,” Trump said on social media. “We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled. China will likewise be charged an additional 10% Tariff on that date.”

THE PROPOSED TARIFFS
Under the proposal, the US will impose tariffs of 25% on all imports from Mexico.

It would impose tariffs of 25% on all Canadian imports except energy. Energy imports from Canada would receive tariffs of 10%.

Canada had already proposed retaliatory tariffs of 25% on Canadian dollar (C$) 155 billion ($108 billion) worth of US imports.

The tariffs would be imposed in two phases. The first phase would cover C$30 billion of US imports of beverages, cosmetic, paper products and some finished plastics products, among others.

Canada was preparing a second list, worth C$125 billion.

EFFECT ON CHEMICALS
Canada is a large source of imports of polyethylene (PE) to plastic processing hubs in the bordering states of Michigan, Illinois and Ohio. In addition, Canada exports PE to Texas.

Canada also exports notable amounts of polypropylene (PP) and ammonia to the US.

The nation accounts for nearly 90% of all US imports of potassium chloride, also known as muriate of potash (MOP).

Mexico and Canada export meaningful amounts of purified terephthalic acid (PTA) to the US.

China exports notable amounts of methylene diphenyl diisocyanate (MDI).

Mexico and China are important sources of the main feedstock used to make fluorochemicals and fluoropolymers.

OTHER TARIFFS PROPOSALS

• The US has threatened to impose tariffs of 25% on imports from the EU.
• On 12 March, the US will impose tariffs of 25% on all imports of steel and aluminium, a move that will remove exemptions that it granted to some countries. The US will expand the tariff to cover more products made of steel and aluminium.

Please also visit the US tariff, policy – impact on chemicals and energy topic page

($1 = C$1.44)

Thumbnail photo: Containers. (By XINHUA/Shutterstock)