1. Rising costs
1). Tariffs increase direct costs: When importing countries increase tariffs on silicone products, exporters need to pay more taxes, which directly increases product costs. For example, when the United States imposes tariffs on some silicone products, Chinese exporters may bear the tariff costs themselves to maintain their market share, resulting in reduced profits; if the costs are passed on to customers, the price competitiveness of products will be reduced.
2). Increased compliance costs: In response to changes in tariff policies, companies need to invest more resources in researching policies, handling relevant procedures, and preparing documents such as certificates of origin, which increases compliance costs and administrative burdens. For example, under the EU carbon tariff mechanism, exporters may need to bear the costs of emission reporting and verification, as well as the costs of dealing with new bureaucracies and cumbersome inspections.
2. Changes in market demand
1). Decline in demand in some markets: Increased tariffs have increased the prices of silicone products in importing countries, reducing consumers' willingness to buy, especially in price-sensitive markets, where demand has dropped significantly. For example, after the United States imposed tariffs, my country's organic silicon exports to the United States declined. In March, my country's organic silicon trade with the United States accounted for 4% of the total export volume, a decrease of 19.23% month-on-month, and it is expected that there will be a downward trend in April.
2). Adjustment of the export market structure: Tariff policy fluctuations have caused companies to re-evaluate the trade costs and risks of different markets, which may lead to changes in the export market structure. In some markets with high trade barriers, companies will reduce exports and turn to markets with lower tariffs or trade agreements. In the long run, this can diversify export areas, but in the short term, companies need to adapt to new market demands and standards and face certain market development costs and risks.
3. Unstable supply chain
1). Affected raw material supply: If the tariff policy affects the upstream raw material supply of the organic silicon industry, it may lead to raw material shortages or price fluctuations. For example, imposing tariffs on raw materials such as industrial silicon will increase the raw material costs of organic silicon manufacturers or cause unstable supply, thereby affecting production plans and product supply.
2). Obstruction of logistics and transportation: Fluctuations in tariff policies may lead to increased trade frictions and trade barriers, resulting in longer logistics transportation time, higher transportation costs, and even problems such as goods being detained at customs, affecting the timeliness and stability of the supply chain.
In addition, frequent fluctuations in tariff policies will make it difficult for companies to formulate long-term and stable development strategies, affecting their decisions in R&D, production scale expansion, market development, etc., and hindering the healthy development of the silicone industry.