Corrects to remove references to antimony and indium, which are not subject to US tariffs.
Planned US tariffs on $200bn of Chinese imports are expected to have little impact on most metals markets because of limited trading volumes between the two countries, but bismuth and several electronic metals are likely to be affected.
The US Trade Representative's office gave formal notice yesterday that it would increase tariffs on $200 bn/yr of Chinese imports to 25pc from 10pc effective on 10 May.
The tariff hike, originally scheduled to take effect on 1 January and later delayed to 2 March, was suspended indefinitely as US and Chinese negotiators began work on a comprehensive trade agreement earlier this year.
Exports of rare earths, one of the major commodities traded between China and the US, would be little affected as Washington had already removed most rare earths from its initial list of products in September 2018, when it imposed a 10pc tariff on $200 bn/yr of imports from China.
China accounts for more than 90pc of the global supply of rare earths, and the US imports 70-80pc of rare earth oxides and metals from China.
The additional tariffs will have a significant impact on China's bismuth market as the US is the largest buyer of Chinese supplies. Prices are expected to be further pressured given oversupply and weak consumer demand. Market participants are also concerned about a potential release of bismuth stocks from the failed Fanya Metal Exchange.
Market participants are overall gauging the impact of additional tariffs, saying the US has gone back on its word several times during the trade war in the past two years and that the outcome will depend on how the US-China negotiations develop.
China's vice premier Liu He will be in Washington on 9-10 May for another round of talks.
Even if the additional tariffs are imposed on 10 May, prices are not expected to fall much because of high production costs and a weak spot market.
The tariff hike will not affect battery metals and materials as China is the world's largest consumer market. Although China is a net exporter of lithium hydroxide and graphite, most shipments go to Japan and South Korea. But the trade dispute could affect China's macro economy and electric vehicle sector, which is likely to weigh on demand for battery metals in the longer term.
Those involved in the trading of electronic metals, including germanium metal and gallium, have expressed concerns as the US is a major export destination. The higher tariffs could weaken demand and cause prices to fall.
As for vanadium, the higher tariffs will not affect the market as the US has imposed an anti-dumping duty on Chinese imports of the metal since 2003. Exports of magnesium will be little affected because of anti-dumping duties.
The Chinese government is very likely to take counter-measures, although Beijing has yet to confirm details of new retaliatory tariffs. "The escalation of the trade friction is not in the interest of the people of the two countries and the people of the world," China's commerce ministry said on 8 May.
Beijing in September 2018 imposed a 10pc import tariff on 3,571 items and a 5pc import tariff on 1,636 items from the US, after the US slapped a 10pc tariff on $200bn/yr of Chinese imports. China's September tariff list includes hundreds of base metals, minor metals, rare earths and ferro-alloys.
China also imposed a 5pc tariff on imports of roasted molybdenum concentrate (molybdenum oxide), unroasted concentrate and ammonium molybdate.
The country's larger purchases from the US may be affected if Beijing comes up with higher retaliatory tariffs.
China imported a total of 11,206t of roasted concentrate from the US in 2017, accounting for 39.24pc of the country's total imports. Unroasted concentrate imports of 8,852t were 45pc of China's total imports. It imported 2,836t of ammonium molybdate from the US in 2017, accounting for 93pc of the total.
China's September list also includes a 10pc tariff on lithium carbonate, which is used as feedstock to make lithium-ion batteries used in electric vehicles, although imports from the US have been limited.
