On Aug. 23, China and the US began imposing new rounds of penalties on US$16 billion worth of each other’s goods. This latest round of tariffs included China’s 25 per cent tariff on recovered plastics, paper aluminium and various recovered metals, according to the list released by Chinese authorities earlier in August.
According to the Institute of Scrap Recycling Industries (ISRI), U.S. aluminium exported to China now has a 50 per cent total tariff on it. China on Aug. 23 bumped it up from 25 per cent to 50 per cent.
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The 25 per cent tariff now also applies to recovered PET, PE, PVC, PS and other plastics. U.S. export statistics show aluminium exports, not counting used beverage containers, dropped by about one-third after the 25 per cent penalty went into effect.
In 2017, the U.S. exported a total of $5.6 billion worth of scrap commodities to China. Through the first six months of 2018, the total of U.S. scrap exports to China was $2.2 billion, a decrease of 24 percent from the same time frame last year.
The penalties are China’s latest blow to the U.S. recycling sector, after Beijing hit aluminium scrap with huge retaliatory tariffs in April as part of the trade dispute. Aluminum scrap grouped as UBC and non-UBC for pricing purposes —has been particularly affected by ongoing trade wars and sanctions.
The issue was one of the key topics of discussion at ISRI’s 2018 Commodity Roundtable Forum in Chicago last week. Aluminum scrap remains greater industry attention not only because of its prominence in the tariff debate, but also because of the changes within the industry:
“Our aluminum industry historically has been primary-driven…that has shifted. In the U.S., we’re [now] a scrap-based industry,” said John Weritz, vice president of standards and technology at The Aluminum Association.
Scrap processors and end-product manufacturers alike are expected to discover new areas for recovered material consumption so that the huge amount of scrap can be utilized. For decades, China was the destination for America’s and recyclables and the new scrap tariffs by China are hitting the scrap exporters hard.
“We lost 60 to 70 per cent of where we used to sell our material to, is now gone,” said one of the scrap exporters.
“The impact will be draconian on both U.S. scrap processors and Chinese consumers,” said Michael Lion, Hong Kong-based Chinese metals industry veteran.
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