Custom Manufacturing: Tariff Crisis in Agrochemicals

August 6, 2018by Jayhawk

Today’s global economy is dominated by the consistent rallying cry of “unfair trading practices”. Economic policies in both the United States and China have changed dramatically in accordance with this mentality, forcing numerous industries into significant periods of uncertainty. The retaliatory nature of the tariffs being imposed has upset the global economic balance, including in the custom manufacturing and agrochemicals sectors.

Ostensibly, this tariff crisis arose as administrations attempted to revisit trade deals and level the playing field for industrial markets. Turbulence and disruption are now the new normal, with agrochemicals manufacturers and end-users suffering directly as a result. Reciprocal tariffs have crept into farming, most recently affecting American soybeans.

Traditionally, the Chinese market sources soybeans from the US, while the European Union (EU) trades for soybeans in the South American market. China has now redirected its attention to the EU’s traditional market, while the US and the EU have attempted to strike a new deal for soybeans. This saga continues, with American farmers and agrochemical end-users caught in the balance. The American administration has offered farmers an aid package to allay their concerns, but the future stability of the sector remains uncertain.

This unique crisis has migrated into the custom manufacturing industry, with more direct impacts on the synthesis of agrochemicals. The US sources raw materials for the synthesis of intermediates and active ingredients from countries including China, many of which may be subject to increased tariffs under the United States Trade Representative (USTR) Section 301 Action. The proposed list covers approximately 1,300 separate tariff lines and will undergo further review in a public notice and comment process. USTR will then issue a final determination on the products subject to the additional duties.

The impact on fine chemical custom manufacturers remains to be seen. The complex synthesis of agrochemicals requires a wide variety of chemistries and unit operations that are the strength of nimble, well-equipped service providers. The threat of increased costs will place greater pressure on their role within the agricultural supply chain.

Custom Manufacturing Services and Agrochemicals from JAYHAWK

JAYHAWK is a leading custom chemical manufacturer with extensive experience in the synthesis of chemical building blocks, active ingredients, and intermediates for a range of agrochemical products. If you would like detailed information about creative sourcing options from JAYHAWK, especially in light of this current economic climate, please do not hesitate to contact us.