The impact of tariff war on polyester industrial yarn

Due to the impact of Trump's tariff policy, the prices in the polyester industry chain experienced significant fluctuations last week, but this week the market volatility has narrowed. Recently, some customers inquired about the effect of the U.S. tariffs on polyester industrial yarn, the followings are views on this matter.

According to customs data, in 2024, the largest exported polyester product from China to the United States was polyester industrial yarn, amounting to approximately 62,300 tons. This was followed by short fibers (un-combed) at about 45,100 tons, then BOPET at 17,800 tons, with other products being negligible. The total export of polyester industrial yarn from China in 2024 was 559.6kt, with the amount exported to the U.S. accounting for about 11%. The United States was the primary market for polyester industrial yarn exports. Therefore, the substantial increase in tariffs imposed by the U.S. will certainly affect the export demand for industrial yarn from Chinese enterprises. To explore this further, CCFGroup consulted several polyester industrial yarn companies. According to customer feedback, the impact of tariffs varies depending on the proportion of industrial yarn exports to the U.S. for different enterprises. However, there is a general consensus that, compared to polyester industrial yarn manufacturers, the influence of U.S. tariffs on downstream enterprises is expected to be even greater.

Recently, the United States has been the largest destination for China's polyester industrial yarn exports. However, from the perspective of export share, there was a significant decline in 2019, primarily due to the tariffs imposed by Trump on Chinese goods, which began in 2018. From 2020 to 2023, the proportion of China's polyester industrial yarn exports to the U.S. steadily decreased, until a slight recovery in 2024; however, this level was still less than half of the high level seen in 2018. In reality, many conventional industrial yarns had already experienced a reduction in volume during Trump's first term, and in recent years, the products exported to the U.S. have often been those for which they temporarily could not find suppliers in other countries.

In 2024, China's polyester industrial yarn production was around 2.3 million tons, with exports approximately 560,000 tons and imports about 20,000 tons. Therefore, the apparent domestic demand was 1.76 million tons, indicating that domestic consumption was significantly higher than the export volume. In 2024, the export share of industrial yarn was around 24.3%, with the volume exported to the U.S. accounting for only about 2.7% of the total production. Evaluating based on the domestic demand of 1.76 million tons, if the export volume of downstream products of domestic industrial yarn to the U.S. reached 3.55% or more, it would exceed the direct export volume of industrial yarn.

From the descriptions of items in Customs Tariff Chapters 50-63 (which cover fibers, fabrics, finished products, and clothing), it can be seen that the main products related to polyester industrial yarn downstream products are under Chapters 56 and 59, although other chapters may include a small portion as well. According to customs data, in 2024, the total export value of items under Chapter 56 was $8.003 billion, with exports to the U.S. amounting to $817 million, accounting for around 10.2% of the total and ranking first. The total export value of Chapter 59 items was $9.962 billion, with exports to the U.S. totaling $512 million, taking up about 5.1%, ranking third after Vietnam and India. The combined total export value of items in Chapters 56 and 59 reached $17.965 billion, with exports to the U.S. amounting to $1.329 billion, occupying about 7.4%, ranking second only to Vietnam.

Although it is not possible to determine the exact quantity of polyester industrial yarn downstream products exported to the U.S., analyzing the export values of Chapters 56 and 59 indicates that the share of polyester industrial yarn downstream exports to the U.S. is quite significant. It is estimated that the export volume exceeds that of direct polyester industrial yarn exports, which confirms the feedback from industrial yarn companies that the impact of U.S. tariffs on downstream exports is greater than on the direct exports of industrial yarn.