The Political and Pandemic Impact on Agchem Trade in the U.S.
11 July 2023 A number for factors, both political and natural — the 301 surtaxes on imports from China and the COVID-19 pandemic — have impacted of agrochemical imports and exports in the United States from 2018 to 2022, writes Jim DeLisi in a recent article in AgriBusiness Global DIRECT. More than 580 million kilos of biologically active agrochemicals were imported annually into the U.S. by 2022. The volumes dropped in 2019 and 2020 but have been increasing steeply since then. The chart also breaks down imports from China and India, with the surprising finding that India’s imports are not as strong as expected.
The 301 surtaxes on imports from China have reduced imports from China while increasing imports from other suppliers to the U.S. This suggests that active ingredients are being imported and formulated in the US.
China remains a significant factor for imported formulated herbicides and insecticides, while most imports from Colombia are from ADAMA’s facilities. It highlights the importance of meeting the requirements of free trade agreements, such as the minimum percentage of active ingredients for a product to be considered “territorial” and gain duty-free access into the US.
The article further mentions that imports from Mexico and Canada are likely from formulation facilities owned by major companies in these countries. It compares the rules of origin under NAFTA and the USMCA and emphasizes the advantage India would have if it rejoined the Generalized System of Preferences (GSP) program.
Pressure to move sourcing outside of China has had a limited impact on import patterns for active agricultural chemicals, and China continues its dominance in the supply chain for certain agrochemicals.
In terms of exports, the U.S. has a robust business in the formulation of agrochemicals for consumption both domestically and abroad. It notes that exports have continued to thrive despite the use of Chinese active ingredients. The duty drawback policy in the U.S., puts the country on a level playing field with the rest of the world.
Takeaways: The limited impact of the 301 tariffs on active ingredients is due to the highly regulated production of agrochemicals and the lack of financial justification for building new chemical plants. Companies will continue to source key intermediates from China and many pesticides labeled as “Made in” various countries source their intermediates from China. Lastly, for the West to be competitive worldwide, it needs new production facilities in.
Read the full article at AgriBusiness Global DIRECT.
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