C&EN: "Japanese chemical makers dodge US tariff bullet"

Via C&EN, this trade news (by Katsumori Matsuoka): 

The Japanese chemical industry is breathing a sigh of relief over new US tariffs set to take effect on Aug. 7. Analysts say the deal, which imposes a tariff of 15% on most Japanese goods, will leave the chemical and pharmaceutical industries largely unharmed, though regional sluggishness may surface in the case of plastics for the auto industry.

The tariff is a reduction from the 25% levy that US president Donald J. Trump had threatened to impose on Japan if the country didn’t strike a trade deal, though it is higher than the low-single-digit rate that previously applied to many products from Japan.

Mikiya Yamada, an analyst with Mizuho Securities’ equity research division, says the direct impact of the tariffs on chemical exports to the US will be “insignificant.” The number of chemical products, mainly specialty chemicals, that are exempt from the tariffs has reached approximately 500 items, he says. 

“Japanese products, including pharmaceuticals, have a high share that are exempt from taxation,” he says, and tariffs that do apply should be fairly easy to pass on to customers.

Moreover, Japanese companies that supply plastics and other chemicals to local automakers were preparing to cut prices to help their customers compensate for a 25% tariff, Yamada says. With a 15% tariff, those cuts won’t be as steep.

Definitely interesting to see how manufacturers were indeed prepared to eat some tariffs. Will be interesting to see how this all impacts supply chains.