Interview | China-U.S. pesticide trade relations: Navigating complexity in search of new opportunities

Since the start of the China-U.S. trade war in 2018, this prolonged dispute has significantly impacted the global economy and trade landscape. 

Chemicals and agrochemicals, as key components of trade between China and the U.S., are now facing challenges related to adjustments in their industry chains amid this competition. 

In early February this year, the Trump administration in the United States announced a plan to impose an additional 10% tariff on all goods imported from China, on top of the existing tariffs. This policy has now been implemented, and all Chinese goods arriving in the United States after March 7, 2025, are subject to the additional 10% tariff. On March 3, the U.S. announced that it would impose an additional 10% tariff on certain Chinese products, on top of the existing 10% tariff. The aggressive policy has drawn widespread attention and concern from global markets.

At the time of the announcement of the new tariff policy in February, AgroPages conducted interviews with several Chinese companies that play a key role in pesticide exports to the U.S., as well as American importers. The goal was to gain insights into how the national-level trade war has impacted their business operations and industry development since 2018, as well as their strategies for adaptation. Overall, Chinese pesticide companies have demonstrated remarkable resilience and sustained growth despite considerable pressures, while American importers have adopted various strategies to manage rising costs. Looking ahead, the agrochemical industry is set to navigate a complex international trade landscape filled with both opportunities and challenges. Both sides are closely monitoring policy changes and are flexibly adjusting their business strategies to adapt to the evolving situation.

The Background and Key Developments of the China-U.S. Trade Tariff War

The China-U.S. trade tariff war started in 2018 when President Trump initiated a ″Section 301 investigation,″ citing unfair competitive practices by China concerning intellectual property protection and market access. This led to the imposition of high tariffs on a wide range of Chinese imports, including chemicals and agrochemical products. In response, China swiftly implemented countermeasures by imposing additional tariffs on U.S.-origin goods, also covering chemicals and agrochemical products. This tariff war significantly increased trade costs for chemicals and agrochemical products between the two countries, squeezing profit margins for companies and disrupting industrial and supply chains.

2018:

•  In March, Trump announced the imposition of additional tariffs on Chinese imports, officially kicking off the trade war.

• On July 6, the U.S. imposed an additional 25% tariff on US$34 billion worth of Chinese products, which led to immediate retaliatory actions from China.

• In August, the U.S. added tariffs on another $16 billion worth of Chinese products.

• On September 24, the U.S. rolled out an additional 10% tariff on $200 billion worth of Chinese products, with intentions to raise the rate to 25% in 2019.

2019:

• In May, the U.S. raised the tariff on $200 billion worth of Chinese products from 10% to 25%.

• In August, Trump announced an additional 10% tariff on $300 billion worth of Chinese products.

• In December, China and the U.S. reached a Phase One trade agreement, leading to the cancellation of some tariffs.

2020:

• On January 15, China and the U.S. signed the Phase One trade agreement.

• In August, the U.S. imposed sanctions on Chinese companies over issues related to the South China Sea.

2021:

• The Biden administration largely maintained the tariff policies from the Trump era and intensified technology restrictions on China with a strategy dubbed ″small yard, high fence.″

2024：

• During his campaign, Trump proposed ″Tariffs 2.0,″ which included plans to impose tariffs of 60% or more on all products from China.

2025：

• On February 1, President Trump signed an executive order establishing an additional 10% tariff on imports from China.

• On March 3, the United States announced an additional 10% tariff on certain Chinese products, on top of the existing 10% tariff.

Accelerating the Restructuring of the Agrochemical Industry Chain

The agrochemical industry has encountered considerable challenges in the context of the China-U.S. trade war. Since 2018, the U.S. has implemented an additional 25% tariff on 113 types of pesticide technicals imported from China and a further 7.5% tariff on 18 other technicals.

In the short term, additional U.S. tariffs on Chinese chemicals have led to a decrease in the market share of related products in the U.S. China’s retaliatory measures, including additional tariffs on chemicals and agricultural products originating from the U.S., have impacted the supply of certain high-end chemicals that rely on imports. Consequently, trade costs for chemicals and agrochemicals between China and the U.S. have increased significantly, placing pressure on businesses’ profit margins.

Analysis of customs data from 2015 to 2024 (see Figure 1) reveals that China's pesticide exports to the U.S. peaked in 2019, driven by U.S. importers stockpiling in anticipation of tariff changes. Although export volumes have declined since 2019, they have remained relatively stable compared to the period before 2019. Meanwhile, India's pesticide exports to the U.S. have experienced significant growth in recent years, partially filling the void in the U.S. market.

This suggests that the impact of the China-U.S. trade war on the agrochemical industry is complex and multifaceted. It has not only influenced trade flows between the two countries. Still, it has also prompted relevant businesses to seek new market opportunities and supply chain strategies to navigate the continuously changing international trade environment.

Figure 1．Trends in US Pesticide Imports and Exports from China and India to the US from 2015 to 2024（t）

Source: Customs data; pesticide products are categorized under HS codes 380891, 380892, and 380893.

From a mid-to-long-term perspective, the China-U.S. trade war has catalyzed the restructuring of the global agrochemical industry and reshaped the competitive landscape. The U.S. government is actively promoting the relocation of the chemical industry chain, urging domestic companies to move production to other countries to reduce dependence on the Chinese market. Concurrently, Chinese enterprises are hastening their transformation towards high-end products and globalization to navigate this new global trade environment.

In terms of market expansion, Chinese companies are actively pursuing opportunities in emerging markets across Europe, Southeast Asia, and the Middle East to lessen their reliance on the U.S. market. Additionally, these companies are boosting their investments in independent research and development, making continuous progress in key technologies to enhance their innovation capabilities.

Notably, amid the dual pressures of trade policies and industrial upgrading, several capable Chinese agrochemical companies have begun relocating their production lines to regions such as Southeast Asia, the Middle East, and South America. This strategy goes beyond mere capacity transfer; it involves deeper strategic considerations, including technology transfer, brand localization, and supply chain restructuring. By shifting production or establishing overseas facilities, these companies can not only reduce their dependence on a single market but also take full advantage of local tax incentives and financial resources. For example, by leveraging the low tax rates and abundant financial opportunities in locations like Singapore, companies can optimize their global cash flow. Furthermore, by setting up production bases in Southeast Asia, they can better meet local infrastructure development needs and effectively mitigate trade risks through re-export activities.

Figure 2 clearly illustrates the activities of listed Chinese enterprises in establishing overseas factories over the past decade, highlighting development trends and vividly reflecting the dynamic changes in the global landscape for these companies. After a brief disruption due to the COVID-19 pandemic in 2021, the number of enterprises investing in overseas factories surged to a new peak in 2023, signaling a more determined commitment by Chinese companies to globalization.

Figure 2. Number of Listed Chinese Enterprises Establishing Overseas Factories and Established Factories from 2010 to 2023.

Source: Public information of listed companies

From a regional perspective, multiple Chinese chemical giants and niche leaders have targeted Southeast Asia for expansion. In 2024, direct investments from Chinese chemical enterprises in Southeast Asia increased by 18% compared to the previous year, making up 35% of their total overseas investments. Additionally, emerging markets such as Morocco, India, and Vietnam are attracting greater multinational investment in the chemical sector, gradually enhancing their production capacities. This shift has the potential to reshape global chemical trade dynamics as these countries transition from being mere importers of chemical products to becoming exporters or achieving self-sufficiency within the region. Such a transformation is likely to influence the flow and direction of global chemical trade, significantly altering the overall landscape of the industry.