Easing rhetoric raises chances that US minerals tariffs will be further delayed

By William Clarke
Published: Wednesday, 12 December 2018

The US and China are retreating from an all-out trade war, opening up the possibility that a new tariff on minerals will be further delayed.

Reports that the Chinese government is considering reducing a tariff on car imports have improved the chances that its burgeoning trade war with the United States will dissipate before new tariffs on industrial minerals come into place early in March 2019.

Since late September 2018, the US government has enforced a 10% tariff on several industrial mineral products, including pigments such as titanium dioxide, refractory finished products, lithium and ceramic minerals including kaolin.

These tariffs were initially planned to rise to 25% in January 2019. But trade relations between the US and China thawed at a post-G20 summit held in Buenos Aires where US President Donald Trump and Chinese leader Xi Jinping met for the first time since the country's initial imposition of steel tariffs nine months ago.

After the summit in Argentina, which ended on December 1, Trump announced that he had agreed with Xi to delay new the scheduled increase.

The tariff increase to 25% from 10% was delayed for 90 days. The US said China will consequently start to buy a "very substantial" volume of agricultural and industrial products.

But after a 90-day period "if the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%," the White House warned.

The news on December 10 that China would ease off on on its tariffs on car imports from the US marks a cooling in the trade war, which has been waged since March 2018 when Trump announced tariffs on all steel and aluminium imports into the US.

China fired back in June, imposing aggressive duties on imports of US agricultural good, prompting the US to respond with tariffs on technological goods worth around $50 billion per year, including lithium primary cells.

The dispute was accelerated further in July when the US proposed a 10% tariff on a list of industrial mineral and chemical imports worth some $200 billion. It later increased this proposal to 25% when relations cooled further.

The proposed tariffs prompted widespread objections by US importers and consumers of industrial minerals.

When the tariffs were introduced in September, buyers were relieved that they were initially imposed at 10%.

Several minerals have also been left of the list - these include the refractory minerals graphite, magnesia, alumina and silicon carbide, on which the US steel industry is dependent.  The tariffs also did not affect antimony and rare earths, materials of which China is the only major producer.

And the US oil and gas industry was relieved to see barite, a crucial mineral, left off the list.

US importers and consumers of pigments, talcs and finished refractory products will now hope that the talks with China progress further before the new March deadline.

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