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Insight | Time: Jul 12 2018 9:30AM
Impact of US $200 billion additional tax to polyester industry
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On July 10, Office of the United States Trade Representative announced that US will
take further action in the form of an additional 10 percent ad valorem duty on products of China with annual trade value of approximately $200 billion, and published target product list covers 195 pages. One senior government officials said the tariff will not take effect immediately, but will be reviewed for two months at the August 20-23 hearing. Looking from the published list, polyester filament yarn, polyester staple fibers, and downstream textiles in the polyester industry is involved, and apparels are not covered.

Products involved
3926.20.90 Articles of apparel & clothing accessories, of plastic, nesoi
4015.90.00 Articles of apparel and clothing accessories, excluding gloves, of vulcanized rubber other than hard rubber
4203.10.20 Articles of apparel, of reptile leather
4203.10.40 Articles of apparel, of leather or of composition leather, nesoi
Chapter 50 Silk
Chapter 51 Wool, horse hair yarn and woven fabric
Chapter 52 Cotton
Chapter 53 Other plant textile, yarn and woven fabrics
Chapter 54 Synthetic filaments,strip and the like of chemical fiber textile material
Chapter 55 Synthetic staple fibers,
Chapter 56 Twine, cordage, rope and cables, of wadding, felt, nonwovens and special yarn
Chapter 57 Carpet & other textile floor covering
Chapter 58 Cut corduroy woven pile fabrics,warp pile fabrics,gauze, lace,tapestries, labels,braids, embroidery and quilted textile products
Chapter 59 Textile fabrics coated with gum or amylaceous substances, tire cord fabric, tracing cloth and industrial Textiles
Chapter 60 Knitted or crocheted goods
Chapter 65 Hat and the accessories
701911, 701912, 701919, 701940, 701951, 701952, 701959 Partial glass fiber, including glass wool, and the made-ups
Products not affected
Chapter 61 Knitted or crocheted apparel and the accessories
Chapter 62 Non-knitted or non-crocheted apparel and the accessories
Chapter 63 Other textile made-ups, other made up textile articles, rags, old textiles and pieces of fabric

According to Customs statistics, China exported 133kt of virgin polyester filament yarn to US in 2017, and export of polyester staple fiber totaled 167kt, including 38kt of virgin PSF. Export of virgin polyester filament yarn and polyester staple fiber approached 171kt totally, sharing 0.4% of polyester production in 2017 in China. Export of textiles and apparel amounted to $268.6 billion in China in 2017, and export of textiles to US totaled $12.4 billion, occupying 4.6% of the textiles and apparel export.

The implementation of extra 10 percent tariff is expected to drag down export of polyester fiber and downstream textiles, bearish for downstream demand in polyester industry, while the influence is anticipated to be limited in view of the demand ratio. Whether US will slap extra tariff on Chinese apparel in the later period or not arouses much concern. It is known that export of apparel to US totaled 33 billion Yuan, sharing around 12.3% of total textiles and apparel export in China. If the tariff on apparel is imposed, the effect to demand for polyester industry is supposed to enlarge apparently. However, the program has not yet taken effect, and whether there is a long-term impact and the proportion of the influence need further observation.

You can find the details of the announcement from Target product list

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