Recently, Sino-US trade relations have once again become tense. The United States has launched an anti-dumping investigation into Chinese exports of MDI (Methylene Diphenyl Diisocyanate), while the Trump administration announced an additional 10% tariff on all Chinese imports. These measures have not only directly impacted related industries but also heightened global trade uncertainties.
MDI Anti-Dumping Investigation: Rising Protectionism
On February 12, 2025, the Ad Hoc Coalition for Fair Trade in MDI (composed of BASF and Dow) submitted a petition alleging that Chinese MDI exports were sold in the U.S. market at prices below fair value, causing material harm to domestic industries. After reviewing the evidence, the U.S. International Trade Commission (USITC) determined on March 28, 2025, that there was sufficient reason to proceed with the investigation. A preliminary anti-dumping duty ruling is expected on July 22, 2025.
MDI is a critical chemical intermediate widely used in producing rigid foams, flexible foams, coatings, and adhesives. China is the world’s largest producer and exporter of MDI, with exports to the U.S. accounting for 25% of its total exports in 2024. If anti-dumping duties are imposed, Chinese MDI manufacturers will face steep tariff barriers, leading to soaring export costs and shrinking profit margins.
U.S. domestic MDI prices may rise due to reduced supply, benefiting companies like Huntsman and Covestro that did not join the coalition. However, downstream industries such as plastics and home appliances will face higher costs, undermining their global competitiveness. More broadly, the investigation risks triggering a chain reaction of protectionism. If Europe, India, and other markets follow the U.S. in restricting Chinese MDI, global supply chains could face significant restructuring.
Trump’s Tariff Policy: Escalating Trade Protectionism
In February 2025, the Trump administration announced an additional 10% tariff on all Chinese imports, raising cumulative tariffs on Chinese goods to 20%. This move builds on the 25% Section 301 tariffs imposed during Trump’s first term. Furthermore, Trump signed an executive order imposing 25% tariffs on imported automobiles and plans to levy “reciprocal tariffs” on steel, aluminum, semiconductors, pharmaceuticals, and other products.
The Trump administration’s tariff policy aims to protect domestic industries by raising import prices and boost government revenue. However, it has sparked widespread backlash. Allies like Canada and Mexico swiftly announced retaliatory tariffs on U.S. goods. Economists warn that tariffs will inflate consumer prices, harm household budgets, and potentially slow global economic growth.
Reciprocal Tariffs: Reshaping Global Trade Dynamics
The Trump administration’s “reciprocal tariffs” took effect on April 9, 2025, targeting approximately 185 countries with rates ranging from 10% to 50%. Under the guise of “national security,” this unilateral policy seeks to reshape global trade dynamics through differentiated tariffs. However, such measures risk igniting more trade disputes and further disrupting global supply chains.
China’s Countermeasures
In response to U.S. protectionist actions, China has adopted a firm stance. It announced tariffs of up to 15% on U.S. agricultural products and implemented other retaliatory measures. Meanwhile, Chinese companies are actively adjusting strategies by investing in technological innovation and diversifying markets to mitigate risks.
Conclusion
The escalation of Sino-US trade friction has not only profoundly impacted both economies but also introduced volatility into the global economic landscape. The combined effects of the MDI anti-dumping probe and Trump’s tariff policies may accelerate supply chain restructuring and fuel further protectionism. In this context, international cooperation through multilateral frameworks is essential to resolve trade disputes and safeguard global trade stability and prosperity.
