China Cut the Refund on Finished Goods and Added a Tax on Raw Metal

AI Summary

China is doing two opposite things to its own exporters in 2026. It removed the export VAT rebate on finished goods, withdrawing a refund, and it added an export duty on raw copper and aluminium, imposing a charge. Copper cathode is 30 per cent nominal, cut to 10 per cent provisional, while every wrought line sits at zero.

What happened

Two instruments, one direction of travel, opposite mechanics.

The export VAT rebate was withdrawn on 249 product lines from 1 April 2026, and on 22 battery product lines it was cut from 9 per cent to 6 per cent on the same date before being cancelled on 1 January 2027, as the rebate removal analysis sets out. That is nine percentage points of export value removed across both stages. The rebate is a refund of VAT the exporter already paid upstream, so removing it does not create a new charge — it withdraws a repayment.

The export duty is a new charge at the border, scheduled in the 2026 export duty list. 107 goods carry an export duty in 2026 and 68 of them have a provisional rate below the nominal one. Copper cathode is nominally 30 per cent and provisionally 10 per cent. Ferrochrome is 40 per cent with no provisional relief. Every wrought copper and wrought aluminium line carries a zero provisional rate.

The two instruments get their money in opposite ways. A withdrawn rebate takes back a payment the state had already made. An export duty takes a payment the state had never asked for. On the invoice the importer sees one number either way, and the mechanism behind it determines whether the exporter can absorb it.

Why now

Because the rebate side has a second stage still to land, and the duty side has already been re-rated once in the same year.

The battery rebate falls to zero on 1 January 2027, so a supplier pricing a committed order today is pricing against a cost that increases before delivery. The rebate was already cut once, on 1 April 2026, and the article that covered it noted that the first three points were small enough to disappear inside freight volatility.

On the duty side, the nominal rates are not the operative ones for most goods. 68 of 107 have a provisional rate, and for copper cathode that is the difference between 30 per cent and 10 per cent. A buyer reading the nominal schedule without checking the provisional annex overstates the cost by a factor of three.

And the direction is deliberate rather than fiscal. Raw material is taxed on the way out and wrought product is not, which is a policy about what leaves the country in what form, not a revenue measure.

So what

Put the two instruments on the same base — export value — and the shape of the policy appears.

Three conclusions follow.

On the goods where both are live, the two instruments cost the same order of magnitude, and that is the coincidence rather than the design. Nine percentage points of FOB for the rebate against ten per cent of FOB for copper cathode. An importer who has priced the rebate change into a battery line and not the duty change into a metal line is exposed to the same size of number twice.

But the base is different, and that is what makes them different problems. The rebate is calculated on FOB value, so it scales with price. The export duty is also ad valorem, but it applies to a schedule of 107 named goods, so it applies or does not. A buyer can be exposed to the rebate change on a finished good and to the duty on the input metal, in the same supply chain.

And the zero lines are the policy statement. Wrought copper and wrought aluminium sit at zero provisional duty while the raw forms are taxed. Combined with a rebate withdrawal that lands on finished goods, the two instruments do not push in one direction on every product — they push raw material one way and finished goods another, which is the same pattern the duty schedule shows on its own.

The asymmetry that matters for negotiation: neither charge can be negotiated away at the table, because both are remitted by the Chinese exporter to the Chinese state. What can be negotiated is who absorbs them, and the rebate gives the supplier an argument the duty does not — a withdrawn refund can be described as a cost they “already had” and never passed on, while a new duty is straightforwardly a new line.

For you

• Buyers of copper or aluminium raw material: check the provisional annex before accepting a cost increase. The nominal rate on copper cathode is 30 per cent and the operative rate is 10 per cent, so the difference between reading the schedule and reading it fully is threefold. For ferrochrome there is no provisional rate, so 40 per cent is real.
• Buyers of wrought copper and wrought aluminium: your line carries a zero provisional export duty, which means the export duty is not the instrument moving your price. Ask instead whether the mill has lost a rebate, because that is the change that reaches a finished good.
• Buyers in battery or photovoltaic categories: the second rebate stage lands on 1 January 2027. A quote with a delivery date after that date is pricing against a different cost base, and the passthrough is a negotiation rather than a law — nine points on a $40 unit is $3.60 at full passthrough and less at any share.
• Anyone building a 2027 budget: treat the two instruments separately rather than as one “China cost increase”. They apply to different goods, on different schedules, and one of them was already re-rated once in 2026. A single assumption covering both will be wrong on at least one of them.

The data point

How we calculated this

Both charges are ad valorem, so both need only a value. The rebate is a share of FOB the exporter no longer receives; the duty is a share of FOB the exporter now pays.

export duty        = FOB value x operative rate
$800               = $8,000 x 10%        (copper cathode, provisional rate)

rebate loss        = FOB value x rebate points lost
$3.60 per unit     = $40 x 9 points      (battery cell, both stages)
$3,600 per 1,000   = $40 x 9 points x 1,000

nominal vs operative = 30% against 10%   (copper cathode, 2026 schedule)

Substitute your own FOB value, and check which schedule row applies to your good — nominal, provisional, or absent entirely. On the rebate side the rate is set by the export date on the customs declaration, so the date on the paperwork decides which stage applies.

The point

China is withdrawing a refund from finished goods and imposing a charge on raw material in the same year, and the two are usually reported as one story about export costs. They are not one story. One takes back money the state had already paid out; the other collects money it had never asked for, and it does so on a schedule where 68 of 107 goods have a rate below the headline.

For an importer the practical difference is which of the two reaches your line. Raw metal is taxed, wrought metal is not, and the rebate withdrawal lands on named finished goods. A buyer exposed to both in one supply chain is absorbing the same policy twice, from opposite ends, and the nominal rates in circulation will overstate one of them threefold.

FAQ

Is an export duty the same thing as removing an export tax rebate?

No, and the difference is who the money moves between. A rebate is a refund of VAT the exporter already paid on inputs, so removing it withdraws a payment the state had made. An export duty is a new charge collected at the border on the way out. Both reduce what the exporter keeps per unit sold, and both end up in the FOB price, but one is the absence of a repayment and the other is a new tax. On the invoice the importer sees the same effect.

Which copper and aluminium products carry a Chinese export duty in 2026?

The 2026 schedule lists 107 goods with an export duty, 68 of them at a provisional rate below the nominal one. Copper cathode is 30 per cent nominal, 10 per cent provisional; copper waste and scrap is 30 per cent nominal, 15 per cent provisional; ferrochrome is 40 per cent with no provisional relief. Unwrought aluminium is 30 per cent nominal, 10 per cent provisional. Every wrought copper and wrought aluminium line sits at a zero provisional rate, so the taxed forms are the raw ones.

How much does the rebate change add to a unit price?

It depends on the FOB value and on how much of the loss the supplier passes through. The rebate on battery product lines was cut from 9 per cent to 6 per cent on 1 April 2026 and is cancelled on 1 January 2027, which is nine percentage points in total. On a $40 FOB unit at full passthrough that is $3.60 per unit and $3,600 per 1,000 units. The passthrough share is a negotiation, and the worked table shows the two stages separately because a supplier can absorb the first and pass on the second.

Why should I check the provisional rate rather than the nominal one?

Because for most listed goods they differ, and for copper cathode the difference is a factor of three — 30 per cent nominal against 10 per cent provisional. Sixty-eight of the 107 goods carry a provisional rate. A buyer who reads only the headline schedule overstates the cost on cathode and on several other lines, and understates it where no provisional relief exists at all, as with ferrochrome at 40 per cent.