The US chemical industry is fighting the Donald J. Trump administration’s latest round of proposed tariffs on Chinese-made goods, arguing before US Trade Representative hearings today that imposing the duties would be a major setback for the sector.
In May, the US Trade Representative proposed tariffs of up to 25% on $300 billion worth of annual imports from China. They would be in addition to tariffs on $250 billion of Chinese goods that the administration imposed last year. According to the American Chemistry Council (ACC), a US industry trade group, last year’s tariffs impacted $15.4 billion in annual chemical imports from China.
The latest tariffs mostly affect consumer products such as electronics, toys, and clothing, but they also hit 214 chemical and plastic product categories—including chemicals such as quinones, isobutanal, and benzonitrile—amounting to another $11.0 billion in Chinese chemical imports for a total of $26.4 billion.
“This would amount to the biggest tax increase that US chemical manufacturers have ever experienced,” said the prepared remarks of Ed Brzytwa, the ACC’s director of international trade.
The new tariffs also expose US chemical makers to retaliatory trade barriers on top of the $11 billion in tariffs on chemicals the Chinese government has already levied, the ACC said.
The association pointed out that US chemical makers have invested more than $200 billion in new capacity largely because low-cost shale natural gas has resuscitated the international competitiveness of the US industry. “A prolonged trade war with China could cause the gift of the shale gas revolution to whither and fade,” Brzytwa’s remarks said.
The Society of Chemical Manufacturers & Affiliates, which represents many smaller specialty chemical companies, is concerned that the tariffs will drive up raw material costs for its members, many of whom have no alternative but to buy certain precursors from China because they are made nowhere else.
In his written testimony, Matthew Moedritzer, Socma’s manager of legal and governmental relations, argued that the tariffs would make US makers of specialty chemicals less competitive internationally and thus, ironically, help China. “This opens the door to Chinese companies to move into those markets,” he wrote.
The photo caption accompanying this story was updated on June 20, 2019. The container ship pictured belongs to Evergreen.