President Donald Trump – Impact on Agrochemicals and China Trade
1 August 2025 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%.
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.
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.
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