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China Imposes 15% Tariff on US Coking Coal, Sets Export Control on Critical Minerals

 

 

February 4, 2025 - China said on Feb. 4 it will impose an additional 15% tariff on coking coal and other certain types of coal imported from the US in a retaliatory move that comes right after the US imposed a 10% additional tariff on all Chinese goods.


In a separate announcement, China's commerce ministry and customs said it will tighten the exports of five critical minerals including molybdenum, tungsten and tellurium. While China did not mention any country of export, this comes along with the tariff imposition announcement.


The tariff imposition will come into effect on Feb. 10, while the export curbs come into effect immediately, according to the country's finance and commerce ministries.


China also announced a set of tariffs targeting US exports of liquified natural gas, crude oil and agriculture farming equipment, among others.


Export Curbs on Critical Minerals


China said it would tighten the exports of five critical minerals, citing their 'dual use', adding that such a move safeguards 'national security and interests'.


Molybdenum is essentially used to make steel alloys and is used in other key critical sectors including the solar and aerospace industry. Moly alloys can be used to build military equipment.


The ban aims to target metal moly, which is not exported much by China, sources said. As a result, no major impact is expected for general industrial and commercial purposes, according to sources.


"For molybdenum metal products, the domestic price in China is higher than the international market, so there's not much advantage for exports," a China-based source said.


China's export curbs also target tungsten, tellurium, bismuth and indium-related materials.


Coking Coal Seen Impacted


After imposing an official ban on Australian coking coal in 2020, the US gained a significant market share in China, the world's largest coking coal consumer.


While the ban was lifted in 2023, the US exported around 28 million mt of coking coal to China from 2021 to 2024, accounting for around 15% of the total coking coal imports during that period, according to S&P Global Commodity Insights data.


The US booked 10.7 million mt of met coal imports to China in 2024, up 81% year over year. The latest announcement will raise the tariff levied on US met coal to 18% from 3% on Feb. 10.


China's tariff measure against US coking coal is "unexpected and causing a headache," said a China-based trader holding a US coking coal cargo that is already seaborne. There has been no decision taken yet on whether to divert the cargo to another destination but it could be considered as an option, the trader said.


China's coking coal markets were seemingly anticipating such trade-related developments.


Traders have been shying away from US cargoes to China in recent months due to the fear of a trade war and higher tariffs that could cripple US met coal exports to China, two other traders said.


"It still came a bit earlier than expected during the holidays ... price support is possible for China's domestic and seaborne coking coal of alternative origins given the volume of the US supplies to China, although it's still a bit early to tell," one of the traders said.


A southern China-based steelmaker said they are prepared to take replacement volumes from other origins since there has already been a fall in the US met coal offers in recent months due to the uncertainties over China-US trade relations.


Three other end-users said they are primarily using premium hard coking coal and semi-soft coking coal of US origin, while it is relatively easy to secure alternative supplies from the domestic market, especially semi-soft materials.


"We would discuss about this when the Chinese market reopens tomorrow ... would likely prioritize domestic resources as replacement," one of the end-users said.


China's tariff on US coking coal is also expected to benefit India.


"China tariffs on US [coal] shall further add to supplies [in India] ... more US tons shall be flowing toward India and India is the only active buyer at the moment," an international trader said. However, if export prices are not viable, US miners would have to reduce production or choose a better market, the trader added.