Apr. 16, 2025 - The global landscape has seen dramatic shifts recently, with trade tensions—especially the U.S.-China trade war—creating significant ripples across international markets. Refractories Window has received numerous inquiries from domestic and overseas clients. We have selected some of the most frequently asked questions and responded from the perspective of the refractory industry, offering the latest updates, potential impacts, and strategies.

Scope of Affected Products

The recent reciprocal tariff measures by the U.S. target virtually all imports from China. However, on April 2, the U.S. released a 37-page exemption list covering thousands of items. Based on our analysis, key minerals such as CCM, DBM, FM, BFA, WFA, flake graphite, SiC, and alumina—all of which the U.S. heavily relies on China for—are on the exemption list and not subject to the additional tariffs.

Although the commonly used HS code 250830 for fireclay (including calcined bauxite) is not included in the exemption list, Aluminium ores & concentrates under HS code 260600 is listed. According to further verification by Refractories Window, the U.S. International Trade Commission classifies calcined bauxite under HS code 260600. Therefore, exports of calcined bauxite from China are, in effect, exempt from the tariffs.

Refractories Window has also confirmed with several calcined bauxite exporters that some companies have indeed been using HS code 260600 for customs declaration purposes.

With this confirmation, major refractory raw materials including calcined bauxite, magnesia, brown fused alumina, white fused alumina, graphite, and silicon carbide have all been included in the U.S. exemption list and are no longer subject to retaliatory tariffs.

As for refractories, they are not exempt from the new tariffs, likely due to the U.S.’s well-established domestic refractory industry, with major players like HWI (now merged with Calderys) based there. However, China’s exports of refractories to the U.S. remain small, averaging only 21,600 tons annually, mainly basic and alumino-silicate products, accounting for less than 3% of total Chinese exports. Thus, the overall impact remains limited.

1. What will be fate of consignments those are in transit or lying at Chinese ports for export to USA? Who will pay for the hefty import tariff?

According to Refwin, U.S. policy exempts goods already in transit, which will still be processed under the previous tariff regime.

The high import tariffs will be borne by U.S. importers, inevitably pushing up the local market price. However, if buyers breach contracts or cancel orders, financial losses may shift back to Chinese exporters—especially for deals without advance payments or sufficient risk safeguards.

2. Is there a re-negotiation taking place between the buyer and the seller or the buyer simple wanting to cancel or postponement the deliveries?

Refwin investigations show that U.S. buyers are reacting in several ways: requesting price reductions to offset the new tariffs, delaying shipments in hopes of policy changes, canceling low-margin orders, halting future recurring orders, or even asking Chinese suppliers to reroute through third countries to avoid tariffs. If no alternative suppliers exist outside China, renegotiation becomes unavoidable. However, Chinese suppliers' room for price concessions is minimal compared to the 145% tariff rate.

3. What happens to existing contracts and pending export orders?

If the contract explicitly includes tariff changes as a force majeure event, buyers may seek to modify or terminate the agreement. Otherwise, contracts remain binding, though the risk of default is rising—manifesting in abandoned goods, delayed or refused payments, price renegotiations, and order suspensions—which may ultimately lead to de facto cancellations.

4. How will this trade barrier affect future market conditions, including exports, supply, and pricing?

For products on the exemption list, exports to the U.S. remain unaffected. However, exports of fireclay (including bauxite) and refractories are expected to drop sharply. Refwin estimates suggest that if tariffs are fully enforced, Chinese exports to the U.S. (excluding exempt products) could fall by 90%. Direct transactions will only be viable for irreplaceable or highly profitable items.

Exporters heavily reliant on the U.S. market may face a sudden collapse in orders or widespread cancellations. Some products may be redirected to Chinese local or alternative export markets, theoretically placing downward pressure on local prices.

For U.S. importers, tariffs will raise procurement costs and likely prompt supply chain realignments toward lower-tariff countries. Nonetheless, as China is a dominant exporter of refractory raw materials and produces, No other country can currently replace China in the global market. Even sourcing from other countries would entail higher costs since U.S. tariffs apply globally.

It is also worth noting that the U.S. has imposed additional tariffs on all countries—not just China—though certain countries have a 90-day delay and retain only the base 10% tariff for now. Yet, import costs are rising regardless, it’s just a question of how much.

5. What are Chinese producers/exporters doing in response—now and in the future?

This trade conflict will likely follow a lengthy process, but we believe eventual negotiations are inevitable.

Short-Term Responses:

• Speed up third-country re-export strategies (e.g., via Southeast Asia), while the U.S. is cracking down on these loopholes.
• Renegotiate with buyers to share tariff burdens where possible.
• Apply for export credit insurance to hedge against defaults.
• Temporarily scale back production to manage inventory and cash flow.

Medium to Long-Term Strategies:

• Diversify markets: expand exports to ASEAN, Latin America, Middle East, Africa, Europe, Russia, Brazil, India, Japan, South Korea, etc.
• Invest in overseas production: establish factories in Vietnam, Mexico, Thailand, or even the U.S. to avoid origin-based tariffs.
• Strengthen the Chinese market development to reduce reliance on the U.S. market.
• Seek policy support, including potential tax rebates, tariff subsidies, and financial assistance.
• Foster stronger partnerships with U.S. buyers and encourage industry associations to advocate for exemptions on key materials.

6. How would you assess the implications of China's tightened VAT enforcement and compliance measures?

The Chinese government recently launched a stricter VAT audit regime, targeting tax evasion and false invoicing. Exporters must now provide valid VAT invoices to obtain export permits, limiting their pricing flexibility and weakening cost competitiveness.

In the short term, these policies raise compliance costs and extend tax rebate timelines, curbing exporters’ ability to offer aggressive pricing. However, they also help curb dumping and reduce trade frictions.

In the long run, this data-driven enforcement will push businesses to upgrade their products and brands, while shifting some focus to the domestic market.

Regulators are expected to build a long-term monitoring system using big data to strengthen cross-departmental coordination, while also offering support measures like optimized tax refund and domestic sales support to balance the impact.

Many suppliers have already begun phasing out informal practices, refusing untaxed exports and avoiding high-risk transactions. Encouragingly, an increasing number of overseas buyers now actively seek fully compliant Chinese exporters, recognizing that tax-free exports are unsustainable in the long term.

In short, we believe this as a major trend.

7. Will this strict policy be relaxed in a few months, or is it a long-term shift?

We view this as a long-term, irreversible trend. Chinese authorities have repeatedly emphasized their determination to combat unfair competition and tax evasion. While some exporters may still take risks, enforcement is tightening. This shift reflects China’s broader goal of modernizing its trade system and aligning with global standards.

Overall, since most major refractory raw materials have been included in the exemption list, and exports of Chinese refractories to the U.S. account for only a small proportion, the impact of the reciprocal tariffs imposed by the U.S. on China's refractory industry is significantly smaller than initially expected.

Editor: Marco Tian

Email: marco@refwin.com