Budding US Recycled Pulp Export Industry to Be Hit by Fresh China Tariffs

US recycled pulp imports to China faced tariffs of 20 percent instead of the current 10 percent as of June 1.

The move is part of a wave of tariff hikes – taking them from 5-10 percent to 10-25 percent - on $60 billion worth of US goods announced by the Chinese Ministry of Finance.

It is in retaliation to the US government’s May 10 decision to raise the level of punitive duties from 10 percent to 25 percent on $200 billion worth of Chinese products.Earlier, US trade officials revealed a new list of $300 billion worth of Chinese imports that would be hit by tariffs of up to 25 percent.
The list covers essentially all Chinese products not currently subject to additional duties in the USA, including cell phones and computers.

China first imposed a 10 percent tariff on recycled pulp imports from the US in September 2018 when it slapped 5-10 percent tariffs on more than 5,000 US items worth $60 billion. In China, the base tariff on both virgin and recycled pulp imports from most favored nations, including the US, is zero.

According to data from China Customs, the country’s recycled pulp intake hit approximately 300,000 metric tons last year, with only 5 percent or 1,628 tons from the US.

The recent tariff jump comes at a time when the tonnage from the USA is growing. In the first quarter of this year, China already brought in more than double the US recycled pulp 2018 whole-year figure, at 3,639 tons.

The growth is expected to be exponential in the coming years.

Nine Dragons Paper (Holdings)’s US subsidiary ND Paper started shipping recycled pulp to China from the 218,000-metric tpy Fairmont mill in West Virginia in Q1, and is planning to commission a total of 1 million tons per year (910,000 metric tpy) of recycled pulp capacity at the Biron mill in Wisconsin and the Rumford mill in Maine, PPI Pulp & Paper Week reported.

Apart from recycled pulp, 94 kinds of US paper and paper converting products were subject to additional tariffs of 20-25 percent from June 1 onwards, higher than the current 5-10 percent.
They include newsprint, tissue, fine paper, some cartonboard grades, some recycled containerboard grades and some kraft paper grades.

However, the jumps for those grades are unlikely to have any significant impact on trading because the volumes from the US are negligible in relation to China’s total imports.

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