President Donald Trump – Impact on Agrochemicals and China Trade

By Jim DeLisi

Since “Liberation Day” on April 2, 2025, there has been uncertainty among importers to the U.S. working under significant concerns. Unfortunately, such uncertainty is here to stay until the Trump Administration can complete negotiating reciprocal tariff arrangements with key countries impacting our industry, and/or until the U.S. Supreme Court rules on the constitutionality of the Administration actions.

Fentanyl tariffs on China remain at a flat rate of 20% and are not eligible for duty drawback on exports. There are also fentanyl tariffs on Canada (now 35%) and Mexico (now 25%) for imports that do not meet the United States-Mexico-Canada Agreement (USMCA) rules of origin.

Reciprocal tariffs on China are currently set at a rate of 10%, with many exceptions that are applicable to all trading partners. While the exceptions list has been stable, the rate has been as high as 125% (see Annex 2, the exceptions list).

This rate is to be held until August 12.  Secretary’s Bessent and Lutnik had a successful round of negotiations with their Chinese counterparts in Europe and came away with an agreement to extend the pause an additional 90 days, subject to a final decision by President Trump.  While not yet finalized, it is likely that the pause will be extended until November 10, 2025.  However, current reports suggest that China continues to hold back exports of rare earth metals and magnets.  This may cause the Administration to reverse course and re-impose very high tariffs on Chinese exports to the U.S.

The Office of the United States Trade Representative (USTR) has been working with numerous countries to try to negotiate deals. The lever that is being used is the idea of tariff reciprocity, which is designed in theory to offset the tariffs and non-tariff barriers to U.S. exports in each country. Here is a list of these rates.

Many of these rates were recently modified by an exchange of letters. Many of these letters include significant commitments for investments in the U.S. (especially the EU, Japan, UK) as well as significant commitments to purchase U.S. Goods and Services.  They all feature very favorable terms for U.S. exported goods, including the removal of non-tariff barriers and preferential duty-free tariff treatment.

Revised rates for countries important to agrochemical trade, effective August 7, 2025, appear to be as follows:  Brazil (10% + 40%), EU (15%), India (25%), Indonesia (19%), Israel (15%), Japan (15%), Malaysia (19%), South Korea (15%), Switzerland (39%), Taiwan (20%),  Vietnam (20%) and the UK (10%). It needs to be assumed that countries that are not on this list snapped back to the originally posted rates.

The current rate of 10% for all countries, except for China, Canada, and Mexico (for products that meet USMCA rules of origin), will likely remain in effect for all others. In theory there may still be time for some revisions for countries that are making a good faith effort. However, it is clear that President Trump is the one to decide.

It appears that all of these agreements include a tariff on “transshipments” of 40%.  The definition of such shipments is fuzzy at this time as generally such shipments are illegal.  It appears that the intent is to apply this new 40% rate on top of existing penalties for such actions.

Three different courts have ruled that the President’s actions are not permitted by the statute he referenced. It is likely that the only one of these actions that matter is the Court of International Trade (CIT). Located in New York City, this court was designated by Congress to handle disputes involving international trade. They ruled against this entire program which would include the fentanyl tariffs (Canada, Mexico, China) as well as the reciprocity tariffs.

The Administration promptly appealed and as of the date of this article, the CIT decision has been held open until the Appeals Court rules. Arguments were held in front of an 11-judge panel on July 31.  Reports are that the judges were very skeptical of the Administration’s position

The other two cases, one in Washington D.C., and the other in California, will likely be folded into this case.

Whomever wins in the Appellate Division will surely appeal to the U.S. Supreme Court. It is highly likely that a stay will be granted until they rule. It is hoped that the Supreme Court would take this case on an expedited schedule.  However, even so, it is unlikely that a final ruling could be completed until the middle of quarter 4, at the earliest.  If this schedule holds, the Administration will have plenty of running room to accomplish their objectives.

If the Supreme Court rules against the Administration, any tariff deals that have been made will likely be null and void. Further, such a ruling may require any tariffs that have been collected to be refunded. However, non-tariff provisions  that have been agreed by individual trading partners might stick.

There is also a class action suit demanding that all previously paid tariffs be refunded. This action will be moot if the court rules in favor of the Administration.

If the court rules against the Administration, there are other ways to accomplish their objectives.  However, they are much more limited in scope and require notice and comment periods.

• One process would allow for 15% across the board tariffs for a limited time period – likely 150 days.
• The President could also expand on the 301 process that he used in his first administration and is still in effect against China. Since China is already a target, they may be able to continue an aggressive approach to China in a similar manner. However, the other targeted countries would require a notice and comment period which would likely stretch out for at least six months. It would be unprecedented to take this action against multiple countries simultaneously.
• There has been no indication that the 201 process, which needs to be related to Defense, is being considered in these instances with the exception of copper derivatives. A new tariff rate of 50% to go into effect on August 1 for copper compounds.

The following chart, as modified on August 3, 2025, represents the current state of affairs for a variety of important agrochemicals. It includes total tariffs (except in the case of 2,4 D for the dumping duties) for China as well as important alternate sources for US imports.

NEW CHART – Is not live text in the Word doc. I cant do anything with it, (cant change typeface or add color) I can only place it as a graphic

The below chart shows total tariffs, again except for 2,4 D dumping margins from key countries that export formulated products to the U.S.

China	301	Fentanyl	Tariff	Reciprocal	Total	product	US
	25.0%	20.0%	6.5%	10.0%	61.5%	Aromatic	Yes
	25.0%	20.0%	5.0%	10.0%	60.0%	Other	Yes
India	Base Tariff	Reciprocal	Total	Germany	Base Tariff	Reciprocal	Total
Aromatic	6.5%	25.0%	31.5%	Aromatic	6.5%	15.0%	21.5%
Other	5.0%	25.0%	30.0%	Other	5.0%	15.0%	20.0%
Switzerland	Base Tariff	Reciprocal	Total	Taiwan	Base Tariff	Reciprocal	Total
Aromatic	6.5%	39.0%	45.5%	Aromatic	6.5%	20.0%	26.5%
Other	5.0%	39.0%	44.0%	Other	5.0%	20.0%	25.0%
Japan	Base Tariff	Reciprocal	Total	Israel	Base Tariff	Reciprocal	Total
Aromatic	6.5%	15.0%	21.5%	Aromatic	6.5%	15.0%	21.5%
Other	5.0%	15.0%	20.0%	Other	5.0%	15.0%	20.0%
Korea	Base Tariff	Reciprocal	Total	Vietnam	Base Tariff	Reciprocal	Total
Aromatic	6.5%	15.0%	21.5%	Aromatic	6.5%	20.0%	26.5%
Other	5.0%	15.0%	20.0%	Other	5.0%	20.0%	25.0%

Please review all of these details with your tariff experts before taking any actions based on this chart.

For those that wish to duplicate this chart for their own imports, it is important that all of the columns be used, since the rates in each column are subject to change, independently from the other columns. The beauty of this approach is that if after August 7 the reciprocal rates change for certain countries, columns can be added to reflect such changes.

We need to take this opportunity to remind all importers that the formulation of an agrochemical is generally not a substantial transformation under U.S. Customs definitions. Therefore, if you import a product into the U.S. from a third country that contains a Chinese active ingredient, for labeling purposes that material is likely properly classified as to where it was formulated, but for tariff purposes, that product is likely still Chinese, and therefore subject to whatever the current tariff situation may be at the time of importation.  When in doubt, you are urged to seek a binding customs ruling.

Readers are also reminded that the individual U.S. citizen that signs the import declaration is solely responsible for making sure that all of the declarations in that document are accurate and correct, including valuation.

The template rule of origin, intended for the reciprocal trade agreement includes a very strict rule of origin, 80% value content. Included in this content, is components sourced from the U.S. or any other country that has a reciprocal trade agreement with the U.S. that includes a tariff rate the same or lower than the source country. This rule makes it impossible for a formulated agrochemical to be imported into the U.S. that does not contain an AI actually manufactured in country.

Lastly, USTR and Customs are determined to aggressively prosecute evaders. In fact, it is highly likely that a chapter on this issue will be included in the commitments that countries will need to make to satisfy President Trump that specifically requires them to assist the U.S. in tracking down evaders.

All reciprocal rates, except for the EU were 15% is the total tariff, will be stacked on top of whatever rate is applicable to an individual 10-digit line item in the U.S. Tariff Schedule.

If a product is loaded on its last mode of transport by August 7, and clear U.S. customs by October 5, 2025, it will not be subject to additional duties.

Russia/Ukraine 

President Trump is determined to find an effective way to force Russia to negotiate a peaceful settlement with the Ukraine.  He had given President Putin 50 days to agree to such talks, later reduced to 5 – 10 days.  Therefore, as of August 8, President Trump may impose substantial “secondary tariffs” on key countries that import Russian energy products, including oil.  Tariffs of 100% or more could be in the offing for China, India and Brazil, and perhaps some others.  It is likely that they will be across the board levies, with no exceptions.  If necessary, there is legislation in the Senate, supported by a very large bi-partisan majority for such tariff rate to be 500%!

U.S. Import Quantities

We maintain records that seek to quantify the gross volume of imports of biologically active agrochemicals into the U.S. Our chart would appear to confirm suspicions that imports of such products since the election of President Trump have surged.

We find the following:

• December 2024 through April 2025: 288,000 MT
• December 2023 through April 2024: 205,000 MT
• December 2022 through April 2023: 223,000 MT
• December 2021 through April 2022: 256,000 MT
• December 2020 through April 2021: 225,000 MT

This is another clear indication that there is likely enough inventory to close out this season already in the U.S.

2,4-D Dumping Case

Corteva has now definitely prevailed in this action.  The final dumping margins posted by Commerce are detailed below:

Totals (deposit rates)

• CHINA
  • CAC   153.08%
  • Rainbow    296.21%
  • All others    153.08%
• INDIA
  • Atul    25.91%
  • Meghmani    9.5%
  • All others   17.78%

It is also important to acknowledge that this order covers imports of 2,4 D derivatives that contain Chinese or Indian 2,4 D acid, esters, or salts, produced in any third country, including lands that have Free Trade Agreements with the U.S., that have rules of origin that would imply that the such materials were made in that country and otherwise enter the U.S. duty free.

By law, U.S. dumping orders sunset in five years. However, it is relatively easy to renew such orders so it is likely that it will remain in place for many years. There are provisions for annual reviews on the rates, which are not very burdensome to the U.S. proponent, but can be costly for objectors.  However, in this case, since the stakes are so high, it is likely that the annual review cycle will be vigorously contested.

It will be interesting to see if other U.S. active ingredient producers follow this approach.

The Department of Commerce published a Federal Register Notice on May 27, (available here) officially announcing the outcome and directing U.S. Customs to finally liquidate any open import entries. In addition, this notice invites companies that wish to be notified of upcoming annual reviews to register such interest. It must be noted that this notice only covers the dumping margins. The countervailing duty margins that were previously announced are in addition to these rates.

USMCA Update 

It appears that the USTR is preparing to open these discussions in October or November of this year. It remains the case that USTR is still not fully staffed, and all existing staff is fully engaged in the reciprocity discussions. The deadline for the renewal of USMCA remains July 1, 2026.

There are indications that the Trump Administration may allow this agreement to lapse. At the very minimum they will be looking for modification, most especially to tighten up the rules of origin to be sure that China cannot use this agreement as a springboard into the U.S.

There are two aspects of the current rules of origin that are important to agrochemical industry:

• Chapter 29 – organic chemicals – chemical reaction rule
• Section 3808 – formulated agrochemicals – 50% weight content rule

Once the negotiations begin, we will be carefully monitoring the talks to get as much advanced notice as possible regarding any potential modifications of these rules.

There will also be significant pressure applied by industry for a change in the current understanding to allow for manufacturing duty drawback claims within North America, as well as exports directly from Free Trade Zones within North America. The restrictions on manufacturing drawback in the current agreement are highly detrimental to manufacturing activities, particularly in the U.S. since for the most part, neither Mexico nor Canada have any tariffs on imported raw materials.

Exception List, Annex II

There have to date been no revisions of this annex despite many efforts to see it opened-up for revisions. It is highly unlikely that this annex will be opened in the near term as there is no process in place for this to occur. A fair, open and transparent process would be necessary to avoid charges of corruption and/or favoritism. If such an opening was offered, first in line should be U.S. producers who have been disadvantage in instances where imported intermediates are significantly tariffed while the finished products they produce are on the exceptions list.  Here is a link to annex…

However, there is a chance that the list could be significantly shortened if the Administration decides to move forward with the imposition of tariffs on pharmaceutical imports. They have been threatening to take such an action, with tariffs up to as high as 200%, since well before April 2, 2025. Such an action cannot be taken lightly since it could have a significant impact on government finances as it drives up the cost for Medicare, Medicaid and the Veterans Administration. However, when the list was established, it was noted that it would be modified if this action was taken.  •