According to reports from the US, accumulation of Chinacals from china that farmers were expecting is ongoing. The agricultural supplies of the US is doing so to reserve the chemicals to January a time when the tax doubles the original charges. The chemicals were meant to enhance the growth of plants by controlling the pests.
The US president, Donald Trump mentioned the risky decision of raising the tariffs to add on the ongoing war of trade between the two states which has lasted for 8 months. This will have an effect on goods and products worth $250 billion from the Chinese. Furthermore $113 billion products from the US will also be at risk.
Deliveries by the US companies dealing with chemicals and fertilizers will be affected by higher taxes Which projects to $28 billion chemical firms. Reports by the consultancy firm reveals that, the US chemical industries depend on about 40% of the Chinese chemical ingredients for manufacturing of farm chemicals.
Nutrien Limited which is the leading retail industry in the US dealing with farm chemical suppliers is also reserving the available chemicals that will be in circulation until the high-planting season in 2019 is over. The company is also investing $300 million more in researches to develop new chemicals.
The CEO of the agricultural retailers association, Daren Coppock added saying that various suppliers have engaged in the same act. “Distributors who were capable of reserving the chemicals would do the same” he added. The trade war between the two states which are leading economically would greatly affect any agricultural company by causing a raise in the staple foods.
Import taxes have been raised by the Chinese on the US crops that include soybeans that resulted in the closing down of the exports amounting to $12 billion in the year 2017. The levied taxes took effect as from 24 of September. The imposed taxes of 10% were levied on 5700 Chinese exports with an expected rise to 25% on 1st of January. This crisis has resulted to an emergency meeting between the two state leaders that will be discussed in Argentina during the G20 summit.
However, the issue could be solved basing on Trumps comments on the 16th of November that paved some light to resolving the matter. Some of the small chemical companies in the US like Willowood have increased prices due cater for the raised tariffs. The president of North Dakota also registered his disappointment regarding the issue stating that farmers crops are endangered while the tariffs rise restricting buying products from china therefore opt to depend on Brazil as the alternative source.
According to Cappock, farmers were made to avoid buying pesticides due to the higher prices. Reports by the US Department of agriculture shows that soy farmers from US used $52 per acre in buying farm products in 2017 which projects to 12% of their grand costs. China will the most affected state if it’s hit by doubled tariffs bearing in mind that some of its chemical product like glyphosate already felt the effect of the imposed taxes.
This tariffs are meant to ensure fairness in trade between the two states by regulating china’s exploitation of the market which were comments by the spokesperson of the US Trade representatives office. Since the passing of the tariffs, supply firms have raised prices that are transferred on to retailers and buyers with a report from the export manager of china saying that US is no longer a suitable avenue for business.