The US and China signed the Phase One Trade Agreement on 15th January. Going through the text to see the impact this Phase One Agreement will have on wool reveals that the additional 15% import duty that was imposed in September on US imports of wool clothing from China remains in place. That means that, for example, US imports of wool sweaters from China has the regular import duty of 16% PLUS the additional 15% duty, a total of 31% added to the import cost of the sweater from China. One other aspect of the Phase One Agreement is that China has agreed to import an additional US$200 billion of products from the US over the next two years compared with the $185 billion imported by China from the US in 2017. Greasy wool is included in the list of products that China can choose to import in this additional US$200 billion. The US is not a large wool producer, producing about 10 mkg greasy of shorn wool (about the same as Tasmania). It exports around 4 mkg of greasy wool to China, valued at around US$13 million. So, the scope for the US to increase its exports of raw wool to China is pretty limited.
Further details including a chart showing the recent movements in the EMI stack up against the longer-term trends in the EMI and global events over the past three decades are provided in the full edition of the NCWSBA Weekly Newsletter for the week ending 24th January.
