Fresh tariffs on Chinese goods ‘weaken competitiveness of U.S. chemicals industry,’ cautions ACC

U.S. China trade war as chessThe frustration is palpable in the oral testimony of Ed Brzytwa, Director of International Trade of the American Chemistry Council (ACC; Washington, DC), during a public hearing on U.S. List 3 of tariffs targeting Chinese products. “Before I explain the impact of these tariffs and China’s retaliation on our industry and the supply chains that underpin U.S. manufacturing, I would like to note ACC’s disappointment that the administration did not heed our request in July to remove approximately $2.2 billion in Chinese imports of chemicals and plastics from U.S. List 2,” said Brzytwa.

U.S. List 2, which includes tariffs on $2.2 billion in chemicals and plastics imported from China, went into effect today. China retaliated immediately. “At precisely 12:01 AM ET, the Chinese Ministry of Commerce released a statement vowing to ‘make the necessary counterattacks,’ ” NPR reported today. “And then it matched the Trump administration's move with tariffs on $16 billion worth of U.S. imports, ranging from diesel fuel and coal to medical instruments and cars.” PlasticsToday reported in June on the potential impact on medical devices and industry’s response.

List 2 of Section 301 tariffs on Chinese products includes a host of polymers, extruded plastic parts and related materials and products. The proposed List 3 ups the ante with numerous chemicals and polymer-based products.

“If tariffs on $2.2 billion in chemicals and plastics imports that appeared on List 2 would weaken the competitiveness of the U.S. chemicals industry, then the $16.4 billion in tariffs on additional products of chemistry in List 3 would have a potentially irreparable impact on our industry’s economic structure and supply chain,” warned Brzytwa. He provided oral testimony at the U.S. Trade Representative Public Hearing on the tariffs on Aug. 20, his second time testifying in less than one month. List 3 tariffs could go into effect as early as October.

Although the ACC shares concerns about China’s unfair trade practices and wanton disregard for intellectual property, the imposition of unilateral trade tariffs are “counterproductive and do little more than invite retaliation that ultimately undermines their stated intent,” said the ACC. In fact, the looming tariffs have already begun to roil the U.S. resin market, as we noted in this week’s resin report, “China’s chilling effect on spot PE prices.”

Supply chains are complex and intricate, relying on interconnected  networks and channels that work together as one to bring finished products to market, said Brzytwa at the hearing. “They cannot easily be reconfigured to meet the whims of U.S. trade policy,” he added. 

Meanwhile, a Chinese delegation has been meeting with its U.S. counterparts in Washington, DC, this week to seek a solution to the burgeoning trade war. It does not appear to be making much progress. In an interview with Reuters this week, Trump said there is no time frame for ending the trade dispute. NPR reports that late last month Trump further ramped up the rhetoric, saying that he is “ready to go to 500.” By that he means he would consider imposing tariffs on imports of all Chinese goods, according to NPR, noting that the U.S. imported $505 billion worth of Chinese goods last year, per Census Bureau data.

As somebody once said in a very different context, buckle up—it’s going to be a bumpy ride!

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