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November Newsletter: Tariffs

 

 

 

 

 

 

 

The issue around tariffs has been a prevalent topic in the news lately. Much of that has been centered around the impact to steel and aluminum. Many chemicals and specialty gases enter the US with tariffs that vary depending on the source of that chemical or specialty gas. Global trade can be a complex myriad of regulations, codes and tariffs which require special skills and knowledge to navigate. What exactly do tariffs mean for the specialty gas industry?

What Are Tariffs
Tariffs are a fee placed on imports to increase their price. All countries use tariffs to one extent or another. The amount of the tariff reflects certain governmental priorities including the protection of certain industries/jobs or to regulate the use of certain products. If foreign products cost more, according to the theory, then importers and consumers will be more likely to turn to domestic products or to use more favored substitute products rather than imported or lower cost alternatives. There are two basic types of tariffs. One type increases as the cost of the goods increases—this is an ad valorem tariff and is usually set as a percentage of the cost of the goods (say, 3.7% of the total cost). The other type places a fixed amount on the goods regardless of their price (say, $1000 per item)—this is a specific tariff.

Who Pays
Tariffs are always paid by the importer, not the exporter. That is, the US importer pays the tariff on a specialty gas, not the foreign supplier. The cost of the tariff might or might not be passed on to the consumer. Some tariffs have the potential to affect a wide range of industries downstream. A tariff on raw materials means that the products manufactured with those raw materials will be more expensive. For example, an increased tariff on chromium might raise the price of domestic steel, since chromium is used in high tensile steel making, and that might raise the price of domestic cars. In addition, if the tariff turns importers and consumers to domestic sources and those sources are not able to meet the higher demand, scarcity will also raise domestic prices.

Who Imports Specialty Gases & Who Exports
Importers and exporters of specialty gases are constantly shifting as new production facilities, new tariffs, and new demands emerge globally. For example, market analysts expect that “Asia-Pacific will become the fastest growing specialty gas market globally in the next five years, and China will dominate in both demand and production.” At the same time, Australia recently welcomed construction of its own specialty gases production facility “to locally produce and supply over 8,000 high purity and specialty gases to many high value industries in Australia, and free the local supply chain from some of the import constraints it had previously faced.” That facility may eventually export to the entire South Pacific region. The hope is that new sources for specialty gases will constantly arise to fill the gap when old sources aren’t available.

The Role of Electronic Fluorocarbons
Electronic Fluorocarbons has global partnerships and multiple suppliers that make us the go-to source for specialty gases at the highest purity levels possible. As an expert in the sourcing, import, purification, custom packaging and export of specialty gases and chemicals, we take a wholistic approach to balancing geo-political risk in how we manage our robust supply chain.  We’re dedicated to supplying fluorocarbons, rare gases, high purity hydrcarbons and specialty gases to meet all of your customer’s needs at the fairest possible prices. Please call 1-888-924-3371 or email us at sales@efgases.com for more information about our services and products.

 

Download EFC’s November 2018 Newsletter-PDF

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