Plastics groups call Trump steel tariffs 'dangerous, disruptive'

Washington — Plastics industry business groups pushed back hard against the Trump administration's May 31 decision to move forward with tariffs on steel and aluminum from Canada, Mexico and Europe, calling it "dangerous" trade policy that will raise prices and cost industry jobs.

"The Trump administration's decision today to impose tariffs on imports of steel and aluminum from Mexico, Canada and the [European Union] — America's strongest trading partners — will benefit America's trade rivals and cost American jobs, plain and simple," said Bill Carteaux, CEO of the Washington-based Plastics Industry Association.

"We urge President [Donald] Trump and his administration to reconsider this dangerous, disruptive approach to trade policy," he said, adding that the tariffs would particularly hit mold makers since much of the steel they use comes from the EU and can't be sourced in the United States.

"These tariffs could quite simply put these companies at risk of going out of business, all while increasing costs that will be felt throughout the domestic supply chain," Carteaux said. "American manufacturers need stable, consistent trade policies and should not have to suffer constraints due to a trade war."

Similarly, the head of the American Chemistry Council said the tariffs "have the potential to threaten U.S. economic security" and hurt planned chemical and plastics industry investments of nearly $200 billion, much of it enabled by shale gas feedstocks that are transforming the U.S. into a low-cost producer.

"Today's announcement to levy steel and aluminum tariffs against three of our closest allies and trading partners will disadvantage U.S. chemical manufacturing and put our country's manufacturing renaissance at risk," said ACC CEO Cal Dooley. "The unilateral move will also invite retaliation and threaten the viability of trade agreements like the North American Free Trade Agreement."

Carteaux also expressed concern the tariffs against Canada and Mexico could "poison the well" in the ongoing NAFTA negotiations.

ACC noted that the EU has already threatened to retaliate against $500 million in U.S. chemical exports.

The chemical and plastics resin sectors have been banking on shale gas leading to significant growth in exports, expanding its trade surplus from $33 billion last year to $73 billion in 2022, ACC estimates.

"Retaliation by our trading partners will curtail U.S. exports and erode the $194 billion in chemical industry investments that are predicated on the U.S. being able to export to the countries targeted by these actions," Dooley said.

The resin sector faces a similar risk in the ongoing Chinese trade dispute. ACC estimates that 40 percent of Beijing's $50 billion in retaliatory tariffs are directed at U.S. chemical and plastics exports.

"We anticipate other trading partners to target chemicals as well," Dooley said.

But the Trump Administration and its allies in manufacturing argue that the tariffs are needed on national security grounds, to protect the steel and aluminum manufacturing capacities in the United States.

Media reports quoted U.S. Commerce Secretary Wilbur Ross as saying that increasing imports are a threat to the steel and aluminum sectors. Government and private analysts say the root problem is a large global overcapacity of steel production, particularly in China.

Ross also linked economic and military security.

"Without a strong economy, you can't have a strong national security," Ross said, noting that he was open to continued talks with all the countries targeted in the tariffs, which take effect at midnight May 31.

In a detailed filing to the U.S. government on May 18, ACC argued that the tariffs would significantly raise construction costs for the wave of new plastics and chemical industry plant building in the United States.

It said that for one ACC member company, about 20 percent of the $6 billion it is spending in its latest U.S. Gulf Coast investments are related to steel.

In another case, ACC said a company that has sourced South Korean steel for a new multibillion dollar U.S. plant is already having problems.

South Korea was originally part of the Trump administration tariffs, but the country was removed from potential duties after it agreed to quotas limiting exports to the United States.

But those quotas mean the company can't get the South Korean steel into the U.S. quickly enough, costing the company $3 million a day for warehousing at the Port of Busan and time spent searching for U.S. sources, ACC said.

Overall, because of diminished export potential and higher construction costs, ACC argues that the tariffs put future investment in the U.S. chemicals and plastics resin sector at risk.

"A higher cost of steel inputs fundamentally changes the value proposition of new construction and directly discourages future investments," it said.

The association said the administration was choosing to support struggling metals industries at the expense of an internationally competitive chemicals sector.

The steel and aluminum tariffs "are intended to protect struggling domestic industries that have failed to achieve profitability in an increasingly global market," ACC said. "However, in an effort to prop up challenged industries, one of America's most competitive and most successful industries — chemicals — will suffer."

The U.S. government set up a process for users of imported steel and aluminum to petition to have what they buy overseas exempted.

That regulatory docket, which has thousands of submissions, includes back and forth between metals importers, who argue that domestic U.S. suppliers cannot meet their needs, and the U.S. steel and aluminum makers, who argue they can.

In a regulatory filing in May in a similar tariff case, Milacron Holdings Corp., the largest U.S. maker of plastics equipment, said the threat of the steel tariffs had already increased domestic steel prices in some cases more than 50 percent and was hurting its DME mold base manufacturing unit.

That had "further magnified" the price disparity between U.S. and Chinese steel and put DME at a "severe competitive disadvantage vs. imported mold bases and finished tool products."