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Chemical industry slams Trump steel tariffs

Industry says moves to protect the U.S. steel and aluminum industries will hurt chemical makers

by Alexander H. Tullo
March 2, 2018

A photo of a Dow petrochemical project.
Credit: Fluor
Dow Chemical started up this ethylene cracker in Freeport, Texas, last year.

The chemical industry’s leading U.S. trade group, the American Chemistry Council (ACC), has condemned the Trump Administration’s plan to impose tariffs on imported steel and aluminum.

In a meeting with representatives of the steel and aluminum industries yesterday, President Donald J. Trump suggested a 25% tariff on imported steel and a 10% duty on aluminum.

“I remember when I was growing up, U.S. Steel, that was the ultimate company,” Trump said. “And today, you have so many closed plants.”

The administration has grown increasingly concerned about steel. Last month, the Department of Commerce issued a report that called for the U.S. to reduce steel imports. The report pointed out that steel imports grew at double-digit rates in 2017 and that the U.S. now imports more than 30% of the steel it consumes.

Because of foreign competition, the Commerce Department said, the U.S. steel industry has shuttered six oxygen furnace facilities and idled another four since 2000, representing more than half of such plants in the U.S. “Domestic steel production is vital to national security,” it said.

However, ACC is asking Trump to reconsider the tariffs because they will drive up the cost of building chemical plants in the U.S.

“For a chemical manufacturing industry that has invested $185 billion in new factories, expansions, and restarts of facilities around the country, President Trump’s announcement comes at the worst possible time,” ACC said. “More than half of these investment projects are still in the planning stage, and market shifts caused by tariff increases may convince investors to do business elsewhere.”

Petrochemical plants use a lot of steel. For example, Sasol estimates that the $11 billion ethylene cracker and downstream chemical complex it is erecting in Lake Charles, La., will require 58,400 metric tons of steel.

Chemical firms are currently building eight major ethylene projects in the U.S., meant to take advantage of cheap ethane feedstocks derived from shale. Two projects were completed last year. Several more are under consideration.

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