Trade Relations and Paper Tariffs Between the U.S. and China
The Chinese government has made it known that they intend to place a 25 percent tariff on U.S. shipments of OCC along with other types of recycling materials including recovered fiber, as well as scrap plastics. This newest tariff is said to be direct retaliation for the most recent U.S. tariff proposals.
The First Move
China’s Ministry of Commerce made a move on Aug. 8, 2018, and officially issued the latest list of tariffs they plan on implementing on imports of goods from the U.S. Among the identified items, OCC and many other popular types of recovered fiber materials are among those that would be hit with the 25 percent duty. Also included on the list of recycling products getting the new tariff are all scrap plastics sent from the U.S. to China, as well as a number of common types of scrap metals. “The tariffs, which cover a wide variety of product categories in addition to recyclables, cover about $16 billion in imports from the U.S. They are scheduled to take effect Aug. 23, the same day the U.S. plans to enact tariffs on $16 billion in imports from China” (Resource Recycling).
Both countries have recently moved forward with plans to place tariffs on the other country. These tariffs ended up covering $34 billion in imports from each other. China’s most recent act comes one day after the U.S. Trade Representative’s office approved its $16 billion list, which places current U.S. tariffs on Chinese imports at an estimated $50 billion in import value. Although preceding tariffs have impacted the recycling industry in manners affecting steel and aluminum pricing and availability, or by the use and availability of domestic recycling equipment, the new tariffs being proposed from China marks the first instance the primary targets directly being recovered paper and plastic.
Recycling in North America
The North American recycling market stands to be thrown for an even bigger loop than it has already been with previous and smaller scale import restrictions on recycling materials. It could also stand to give other paper mills and centers outside the U.S. a big advantage as they would not be subjected to the tariffs and fees and could operate and offer products at a lower price. This could be a double whammy to the U.S. as they would lose their competitive advantage in the market and loss on of the big importers. But as of now, things are not all bad, and there is still some hope of salvaging the domestic OCC and recycle material market. “China remains the top importer of U.S. recovered fiber, and is among the top importers of scrap plastic despite heavily cutting back its imports of that material. China imported 2.73 million short tons of U.S. OCC during the first half of 2018 and 1.4 million short tons of all other U.S.-sourced recovered fiber. The U.S. sent 30 million pounds of scrap plastic to China during the first half of the year” (Resource Recycling).
China recently approved permits allowing 14.3 million metric tons of scrap paper to be imported into the country this year. They also recently approved an approximate 656,160 metric tons of recovered fiber to be imported from the U.S. this year. Plastic import permit, however, was still very small in comparison to previous numbers at only 444 metric tons. Time will tell where we go from here and what the future of the U.S. and China recycle trade agreement looks like.
At Central Kentucky Fiber Resources, we can answer all of your questions about China's import ban and what it might mean for you. Contact us today to learn more.