Chemical industry slams Trump steel tariffs | Chemical & Engineering News
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Web Date: March 2, 2018

Chemical industry slams Trump steel tariffs

Industry says moves to protect the U.S. steel and aluminum industries will hurt chemical makers
Department: Business
Keywords: Economy, trade, steel, petrochemicals
Dow Chemical started up this ethylene cracker in Freeport, Texas, last year.
Credit: Fluor
A photo of a Dow petrochemical project.
Dow Chemical started up this ethylene cracker in Freeport, Texas, last year.
Credit: Fluor

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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Chris (Sat Mar 03 11:28:13 EST 2018)
I think tariffs are a poor economic policy, but with steel less than $800 a metric ton, the 58,400 metric tons required for an 11B ethylene plant costs less than 46,720,000. A 25% increase from the tariff only brings steel costs up to $58,400,000. It's less than a .1% difference to the cost of the plant. Unless there are extremely nonlinear effects I'm missing, this seems like a trite complaint from the ACC in this case.
Gurumoorthy (Sat Mar 10 03:21:50 EST 2018)
I fully agree with Chris. If the impact of increase in import tariff only affects to about 1% of overall cost, it should not matter much. It will certainly help in restarting closed plants in USA & bring back employment to many
William J. Ristey, Ph.D. (Mon Mar 05 20:43:14 EST 2018)
Economists think that tariffs do not work. Why does the president get to set tariffs?

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