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U.S. Tariff Hikes and Vessel Fees Impact Plastic Products Exports

JLC Mar 22 02:39

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Trump, under the banner of "America First" and in the name of national security, has sparked a global trade tariff war. The United States remains one of the main destinations for China's plastic products exports. This additional tariff, combined with the tariffs imposed during Trump's first term, has cumulatively reached 45%, significantly impacting China's plastic products exports to the United States.

Trump, under the banner of "America First" and in the name of national security, has launched a global trade tariff war, continuing the approach from his first term. Since 2025, he has imposed two rounds of additional tariffs on all Chinese goods, accumulating to an extra 20% in tariffs. Economically, this is aimed at reducing the trade deficit, maintaining economic advantages, and promoting the return of manufacturing. Strategically, it is about maintaining hegemonic status and curbing China's development. By applying pressure through tariffs and trade barriers, China is not afraid but actively responds, imposing additional tariffs twice on some imported goods originating from the United States. Currently, the United States remains one of the main destinations for China's plastic products exports. With the new round of additional tariffs, combined with those from Trump's first term, the total has reached 45%. This has significantly impacted China's export of plastic products to the U.S. In the future, the export of plastic products to the U.S. will continue to show a trend of reduced volume, and the polyolefin raw material market will be somewhat suppressed due to the weakened external demand for plastic products.

Trump's imposition of tariffs on Chinese exported plastic products

Basic tariff. According to the Harmonized Tariff Schedule (HTS), the basic tariff rates for plastic products in the United States vary depending on the type and use of the product. Generally, the tariff range for plastic products is between 0% and 20%. For common plastic products: such as plastic containers, plastic sheets, plastic pipes, etc., the typical tariff rate is 5%-10%. For high-value-added plastic products: such as medical devices made of plastic, engineering plastic products, etc., there may be lower tariff rates.

Trump 1.0 era, tariff imposition situation. In 2018, the United States imposed multiple rounds of tariffs on Chinese goods exported to the U.S. The plastic products industry was also affected: according to announcements by the Office of the United States Trade Representative (USTR), some plastic products were included in the Section 301 tariff list.

The first round of tariff hikes: In July 2018, a 25% tariff was imposed on $34 billion worth of Chinese goods exported to the United States, including some plastic raw materials and products. The second round of tariff hikes: In August 2018, an additional 25% tariff was imposed on $16 billion worth of Chinese goods exported to the United States, involving more plastic products. The third round of tariff hikes: In September 2019, tariffs ranging from 10% to 15% were imposed on nearly $300 billion worth of Chinese goods exported to the United States, including all remaining plastic products. During the Trump 1.0 era, the tariffs added to Chinese plastic products exported to the United States were basically at 25%. After Biden was elected president, during his four-year term, he did not cancel the additional tariffs, so the 25% remains listed as an additional tax item for China's exports of plastic products to the United States.

In the Trump 2.0 era, regarding the situation of additional tariffs. Starting from February 4, 2025, the United States imposed an additional 10% tariff on all goods exported from China to the US, citing issues such as fentanyl. Furthermore, on March 3, 2025, the US further increased the additional tariff from 10% to 20%, and this tariff applies to all categories of goods. Up to now, in the Trump 2.0 era, an additional 20% tariff has been imposed on plastic products exported from China to the US.

The tariff level of specific goods. According to the HTS code (for example, plastic products are usually classified under Harmonized System codes: 3901-3919), the additional tariff rate imposed by the US on plastic products imported from China is as follows: base tariff + additional tariff = total tariff.

Plastic plates, sheets, films, etc. (HS:3905.12.00): the base tariff is 5%, with an additional 45%, making the total tariff 50%. Plastic containers (HS:3923.50.00): the base tariff is 5%-7.5%, with an additional 45%, making the total tariff 50%-52.5%. Other plastic products: depending on the specific code, the total tariff ranges from 45% to 50%.

Analysis of China's Export of Plastic Products to the United States Over the Past Five Years

Data source: General Administration of Customs Jinlianchuang

2020-2024 was a period of three years of the COVID-19 pandemic and two years of post-pandemic recovery. The quantity of China's plastic products exports, except for a slight decline to 24.9589 million tons in 2022, basically maintained a steady growth trend. The volume of Chinese plastic products exported to the United States, after peaking at 7.3134 million tons in 2021, has been on a downward trend. The tariffs imposed by Trump during his first term were not canceled after Biden took office as president; thus, the additional 25% tariff continues to hinder the export of Chinese plastic products to the United States. In terms of average export prices, the average price of China's plastic product exports is higher than the average price of Chinese plastic products exported to the United States, with only 2024 seeing the average price for US exports exceeding the overall export average. Additionally, from the trend in the average price of exported plastic products, it can be seen that the average price reached its peak in 2022, which is consistent with the peak inflation in the United States in 2022, indicating that the prices of commodities are difficult to isolate regionally and still align with major developed economies such as the United States and the European Union.

Data source: General Administration of Customs Jinlianchuang

From the perspective of export value, the amount of China's plastic products exports maintained a growth trend from 2020 to 2022, reaching its highest point in 2022 at $104.115 billion. In 2023, it decreased year-on-year, while in 2024, it increased year-on-year. The export value of China's plastic products to the United States reached its peak in 2021 at $25.752 billion, and from 2000 to 2024, it declined.

Data source: General Administration of Customs Jinlianchuang

From the perspective of the total volume and amount of plastic products exported from China to the United States, as a proportion of the total volume and amount of plastic products exported by China, there is a trend of year-on-year decline. In 2020, the volume of plastic products exported from China to the United States accounted for 29.93% of the total export volume, and the export value accounted for 26.08%. Afterward, the proportion continued to decrease, and by 2024, the volume of plastic products exported to the United States fell to 20.48% of the total export volume, while the export value fell to 21.28%. Looking at the trend in the proportion of exports, 2018, when Trump imposed additional tariffs, was the year with the highest export proportion, with the volume and value proportions reaching 30.16% and 27.78%, respectively. The imposition of additional tariffs had a significant impact on the export of Chinese plastic products. China is developing non-U.S. markets, such as the ASEAN market and the "Belt and Road" market. Therefore, in terms of total export volume and value, growth has still been maintained. However, it must be considered that the ASEAN market still cannot fully replace the U.S. market; its market capacity is not yet comparable to that of the United States, but it is maintaining a certain growth rate.

The US imposes restrictions on China's maritime, logistics, and shipbuilding sectors.

On February 21, 2025, the Office of the United States Trade Representative (USTR) issued a notice soliciting public comments on the proposed actions in response to the Section 301 investigation into China's dominant position in the maritime, logistics, and shipbuilding sectors. The previous U.S. administration launched the 301 investigation in April last year, and in the investigation report released on January 16 this year, it claimed that "China's intention to dominate the maritime, logistics, and shipbuilding industries is unreasonable, which suppresses or restricts U.S. business." The USTR proposes to impose fees and restrictions on international maritime transport services related to Chinese vessel operators and Chinese-built vessels, with the following restrictive measures: First, service fees for Chinese vessel operators: When Chinese-flagged vessels enter U.S. ports, they must pay international maritime service fees, with a maximum single-voyage fee of $1 million or $1,000 per net ton. Second, fees for operators of Chinese-made vessels: When Chinese-made vessels enter U.S. ports, fees will be charged to the operator of the vessel, up to a maximum of $1.5 million. Third, fees for operators ordering Chinese vessels: Based on the proportion of vessels ordered from Chinese shipyards, a maximum single-voyage fee of $1 million will be charged for each entry into U.S. ports. Fourth, fee reductions for U.S.-built vessels: Operators using U.S.-built vessels for transportation can receive certain fee reductions, with a maximum refund of $1 million for each entry of a U.S.-built vessel into a U.S. port. Fifth, restrictions on the transport of U.S. products: A mandatory quota system for the transport of U.S. export goods is required—three years later, 5% and seven years later, 15% of the cargo volume must be carried by U.S.-flagged vessels, of which 5% must be domestically built. The USTR's proposal is currently in the public comment period until the agency holds a hearing on March 24.

The intent of these measures by the U.S. government is very clear and can be summarized into four points: First, to curb China's shipbuilding industry. Second, to protect U.S. economic interests. Third, to enhance the competitiveness of domestic industries. Fourth, to strengthen control over shipping. In summary, these measures reflect the U.S.'s strategic intention to counter China's influence in the global maritime industry, protect its own economic interests, and enhance the competitiveness of domestic industries.

In 2024, the proportion of China's foreign trade maritime volume in the global maritime volume reached 33.3%. Among the top ten container ports globally, six are from mainland China, with Shanghai Port maintaining the world's first place in container throughput for 14 consecutive years, and Ningbo Zhoushan Port keeping the world's first place in cargo throughput for 15 consecutive years. Shipbuilding: In 2024, China continues to lead in the shipbuilding sector, accounting for 55.7% of global ship completions, and in terms of new ship orders, Chinese shipyards received 74% of global orders. Many countries around the world, including China, by providing low-cost maritime services, have supplied the United States with ample product and material transportation services, a cooperation that was originally win-win, but the United States wants to "win alone." According to simulations by the Peterson Institute for International Economics, if the cost of Sino-US maritime trade increases by 15%, it would lead to a 0.8 percentage point increase in the US inflation rate.

China's plastic products exports to the US under increased pressure, polyolefin market bears the brunt

The increase in U.S. tax policies and additional charges on Chinese ships will lead to, first, an increase in export costs. The U.S. raising taxes on imported goods directly leads to an increase in the cost of plastics and downstream products exported from our country to the United States. This increase in cost may compress the profit margins of enterprises, especially those that rely on low-value-added product exports. Additional charges on Chinese ships may further increase logistics costs, which could be passed on to the final product prices, reducing the price competitiveness of our plastics and downstream products in the U.S. market. Second, a decrease in demand. The measures taken by the U.S. to raise taxes and impose additional fees may lead to a decline in the demand for plastics and downstream products exported from our country. Especially for price-sensitive products, consumers may choose other sources or cheaper alternatives. In addition, if the global economic situation is not favorable, these policies may further exacerbate the weakness in market demand. Third, the reshaping of the global supply chain. The U.S. imposing additional charges on Chinese ships may prompt some companies to adjust their global supply chains. For example, companies relying on Chinese exports might turn to other countries or regions to find lower-cost suppliers, which could reduce orders for our plastics and downstream products industry. The impact on the downstream polyolefin industry, as plastic products are widely used in packaging, electronics, automotive, and many other industries. If exports are restricted, it may lead to a reduction in demand from these downstream industries, further affecting the production and sales of plastic products. Particularly, the impact on mid-to-low-end products is greater, such as daily-use plastic items and packaging materials, whose profit margins are small and can hardly bear high tariffs.

Trump views the world from a trader's perspective, unhesitatingly launching tariff wars against allies in Asia, Europe, and North America, using tariffs as part of negotiations and as a means to pressure other countries. However, the consequences also backfire. The OECD has lowered its forecast for U.S. economic growth this year by 0.2 percentage points, while Fitch has cut its forecast for U.S. economic growth this year by 0.4 percentage points. The Federal Reserve minutes released on March 20 showed that the Fed significantly reduced its forecast for economic growth in 2025, while raising its inflation expectations. It lowered the forecast for U.S. economic growth this year from 2.1% expected in December last year to 1.7%, raised the core PCE inflation forecast for this year from 2.5% expected in December last year to 2.8%, and slightly increased the unemployment rate to 4.4%.

In summary, China's plastic products exports to the United States face enormous pressure, but there are also countermeasures. The first is to optimize the product structure, increase the added value of export goods, and develop high-end plastic products to avoid the impact of tariffs. The second is to open up new markets, investing more resources into alternative markets such as the EU and ASEAN, as well as countries along the "Belt and Road." The third is to apply for tariff exclusions; companies can apply for U.S. tariff exclusions (exclusion process), but the process is complex and may not be successful. The fourth is to take advantage of agreement benefits; if China signs free trade agreements with other economies (such as RCEP), it might reduce the tariff burden on other regions. As for the polyolefin market at the raw material end, it will face the reality of a peak in capacity expansion and weak external demand, with the annual price focus shifting downward and volatility decreasing.

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U.S. Tariff Hikes and Vessel Fees Impact Plastic Products Exports

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