This report does not constitute a rating action.
Editor's note: S&P Global Ratings believes there is a high degree of unpredictability around policy implementation by the U.S. administration and possible responses--specifically with regard to tariffs--and the potential effect on economies, supply chains, and credit conditions around the world. As a result, our baseline forecasts carry a significant amount of uncertainty. As situations evolve, we will gauge the macro and credit materiality of potential and actual policy shifts and reassess our guidance accordingly (see our research here: spglobal.com/ratings).
U.S. tariffs will transform the global crop protection industry's trade patterns. Despite temporary disruptions, the sector continues to recover. As U.S. companies reduce their reliance on Chinese suppliers, India is set to capture a larger market share. We anticipate U.S. distributors will rebuild their inventories as demand increases.
What's Happening
The U.S.'s tariffs coincide with a recovery in the global crop protection industry following a prolonged period of destocking. Producers in Asia-Pacific are well placed to handle the tariffs.
Why It Matters
New U.S. tariffs could benefit countries subject to lower tariffs than China. The U.S. is among the top five importers of crop protection products, which include insecticides, herbicides, and fungicides. Half of these imports originate from China. China's exports are becoming costly because of the U.S.'s 30% tariff on Chinese goods. As a result, China may divert these exports to other geographies.
Chart 1
Chart 2
In particular, we expect India's market share to rise as the U.S. importers seek alternative to Chinese suppliers. India is the second-largest exporter of crop protection products after China and accounted for 18% of U.S. imports in 2024. It faces a 10% baseline tariff.
What Comes Next
For the U.S.
While tariff uncertainty may pause U.S. imports temporarily, distributors will likely resume restocking due to the essential nature of crop protection products. Moreover, the U.S. is a net exporter of crop protection products. Its significant import exposure to China means it is unlikely to completely decouple from Chinese suppliers. This will raise costs for U.S. crop producers.
For China
The impact of U.S. tariffs on China's crop protection industry will likely be manageable. The U.S. accounted for only 4%-6% of the country's total exports in 2023-2024. Redirection of U.S. exports to other markets may force a dip in prices.
To avoid tariff charges Chinese producers may shift more formulation products to active ingredients. The U.S. imports both active ingredients and formulation products from China, and some major active ingredients are on tariff exemption list.
China also faces increasing trade tensions with other partners due to recent growth in export volume. It is the world's largest producer and exporter of crop protection products. Tariffs from trading partners would further change the export patterns of China's crop protection products.
For the overall crop protection industry
We expect no material structural changes in supply and demand for now. The US$75 billion global crop protection market faces tariff effects in the next six to 12 months. Beyond this, we anticipate structural demand will cause global trade flows to rebalance. The market is likely to grow at a compounded annual growth rate of 2.5% over the next three years, according to S&P Commodity Insights.
Credit implications for rated entities
UPL Corp. Ltd. (BB/Stable/--) will be able to cope with the tariffs, in our view. A gradual sector recovery will strengthen its earnings. We forecast higher volumes to help the EBITDA of the India-listed company to grow about 5% in fiscal 2026 (ending March 31, 2026). A series of fundraising initiatives will lower its leverage.
The company's U.S. facility has secured active ingredient and formulation supplies until September 2025. Beyond that, it should be able to pass on the rising costs due to tariffs to distributors. The tariffs will likely benefit UPL Corp.'s India business, as the tariff gap between India and China will make Indian supplies more attractive to U.S. customers.
For Syngenta Group Co. Ltd. (BBB+/Stable/--), improving industry conditions, business expansion in China, and cost controls will underpin earnings in 2025-2026, in our view. Cash management will remain Syngenta's focus, but its leverage will stay elevated.
The tariffs will probably dent profitability of the company's U.S. business. Higher input costs, lower farmer affordability, and some potential supply-chain changes will take a toll. The overall impact should be manageable, given the company's well diversified global operations and sales and technological strength.
Related Research
- UPL Corp. Outlook Revised To Stable On Improving Leverage; 'BB' Rating Affirmed, May 21, 2025
- China Commodities Watch: Commodity Chemicals Face A Tougher Road Back Than Agrochemicals, Jan. 6, 2025
- Asia-Pacific Agrochemicals: Green Shoots Signal Gradual Turnaround, Aug. 21, 2024
| Primary Contact: | Anshuman Bharati, Singapore 65-6216-1000; anshuman.bharati@spglobal.com |
| Secondary Contacts: | Betty Huang, Hong Kong 852-2533-3526; betty.huang@spglobal.com |
| Shawn Park, Singapore 65-6216-1047; shawn.park@spglobal.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.