Hi all,
It appears my puppy photos were such a hit in Korea that I’ve been asked to do this month’s castor newsletter for the ICOA. I’ll include one picture at the end just to force you to read the rest of my report.
Anyway, I’d say not much has changed since I presented three months ago in Korea but that would be a lie. Since then, President Trump has instituted a baseline tariff of 25% on all Indian imports as well as an additional 25% tariff to punish India for buying oil from Russia. That brings the total tariffs up to a whopping 50%. That 50% goes into effect for any shipment that leaves India August 28 onwards. Shipments that left after August 7 and arrive prior to September 17 will only be subject to 25%.
Now, President Trump has assured us that India will be paying the tariffs so please do let me know where I can send those invoices to?
The question you all want to know is how is this all going to impact U.S. demand? My short response is that it is too soon to know. No castor in the U.S. has been tariffed at 50% or even 25%. At this point, pretty much all castor in the U.S. has been hit with a 10% tariff and with that 10% tariff we have not seen much of a slowdown in demand. As I said in Korea, even at 10%, the overall price is still within range of historical averages. At 25-50% that is a different story.
The true test will come in Q4 when more expensive product arrives in the States. We have already heard from customers who have said they cannot support 50% increases and might have to look at alternative products.
With regard to the current state of the U.S. economy, it just depends by which metric you want to use to measure it. The stock market seems unfazed by all the tariffs which is surprising since it was the stock/bond markets crashing that caused Trump to pause the tariffs the first time around. The last jobs report was very weak and inflation is starting to tick up. So there are certainly some worrying signs for the economy that will not be helped by making products 50% more expensive. Honestly, the best thing we can hope for are either the courts rule the tariffs illegal or the United States and India negotiate a deal.
Sorry, I wish I had more positive news for everyone. One thing that would help is if somehow castor oil was added to the list of products exempt from tariffs. I would encourage any U.S. based companies to write letters to their representatives and I would encourage our friends in India to put that bug in the ear of anyone they know in the government who might be part of these negotiations. I know the same is happening with countries such as Indonesia and palm oil which is faced with a 19% tariff coming into the U.S. As, promised, I leave you with a picture of my dog. May he bring you some extra joy at a time when we could all use some.
Please enjoy the rest of your summer and I look forward to catching up with everyone soon.
Jonathan Kaplan
Co-President, Alnor Oil
*The opinions expressed in this newsletter are solely those of the author and do not necessarily reflect the views of The International Castor Oil Association.*