Singapore — The synthetic rubber and tire market are being pulled into the US-China trade war, with China set to enforce a 10% tariff on various synthetic rubber and tire products originating in the US or Canada by Monday, according to China's Ministry of Commerce.
The decision follows a third round of tariffs imposed by the US on Chinese products.
The list of products to come under China's 10% tariff include several synthetic rubber products such as neoprene rubber, as well as a list of tire products.
The list is a retaliation to the US' announcement that it would place a 10% tariff on synthetic rubber and tire products from China from Monday, with the tariffs due to increase to 25% by January 1.
The US list of tariffs on Chinese products included butadiene, the feedstock for synthetic butadiene rubber. About 70% of synthetic rubber goes into tire making.
With China one of the larger trade partners of the US for the tire industry, the initial response from synthetic rubber makers was that the Chinese tire and SBR industry will certainly suffer from the tariffs.
According to figures from the US Department of Commerce, China was the largest trading partner of the US for tires in 2017, with the value of its tire exports at $1.95 billion in the year.
It was the top source of truck or bus tires for the US in 2017, exporting 6.5 million tires, making up 44% of such imports.
"We will definitely be hit; we are just not certain by how much," said one Chinese synthetic rubber maker.
As for synthetic rubber trade flows, there would be some, albeit small impact on US imports to China. China imported 6.6% of its 298,000 mt of SBR imports in 2017 from the US. In 2018 to date, SBR volumes from the US comprise 6.9% of total imports.
In the upstream butadiene market, there is likely to be little direct impact on Chinese import and export trade flows, market sources said.
Source: S&P Global