Washington — U.S. plastics industry lobbying groups were out in force this week against President Donald Trump's latest tariffs on Chinese imports, arguing that the escalating trade conflict could shut off U.S. plastics exports to China and make U.S. companies less competitive internationally.
The American Chemistry Council testified July 25 before a special panel in Washington and the CEO of the Plastics Industry Association, Bill Carteaux, provided written comments, arguing against the Trump administration's plans for 25 percent tariffs on Chinese imports.
The U.S. government is asking for comments on proposed tariffs against 152 chemical and plastics imports worth an $2.2 billion, with most of that being plastics materials and products, according to ACC.
Since July 6, the U.S. government has been levying 25 percent tariffs against $34 billion worth of Chinese imports, including Chinese made machinery and molds for plastics.
But the additional plastics tariffs in the July 24-25 hearing would be part of the next round, against an additional $16 billion in Chinese imports.
Carteaux said tariffs on the 152 products, part of a U.S. list called Annex C, would raise prices in the U.S. manufacturing supply chain and be a “net negative” for U.S. industry.
“Small- and medium-sized companies in the plastics industry will be subjected to a profit squeeze due to higher costs of inputs of production,” Carteaux wrote, noting that plastics companies supply a broad range of end-markets such as medical, automotive, building and construction, electronics, consumer products and packaging.
“The effect of higher tariffs on plastics materials and products on those industries will be net negative,” he wrote. “We urge [the U.S. Trade Representative] to pursue other strategies that would instead lead to greater market access of plastics materials and products in China.”
The association said that for the products proposed in this latest round of tariffs, the U.S. had a trade surplus of $1.2 billion in 2017, making tariffs on those products “a solution in search of a problem.”
The trade picture for the U.S. plastics industry is complex – the machinery and mold sectors, for example, have a trade deficit with China, and tariffs were put on those Chinese imports in the July 6 round of tariffs.
Broadly speaking, the U.S. plastics processing sector also has a trade deficit with China, hitting $12.3 billion in 2016, the last year figures are available.
Perc Pineda, chief economist for the association, said a trade deficit does not necessarily indicate “any particular problem in the processing sector” and said there could be several reasons for the deficit, including China's unique position in the plastics supply chain.
“Even if they were to target the $10 [billion]-$12 billion deficit in plastics products, tariffs still wouldn't make sense,” he said. “They're the wrong tool for righting a trade imbalance.”
Both associations said the picture is quite different for the products at issue in this hearing, since they are in surplus with China.
ACC said that the Trump administration's tariffs against plastics materials will backfire and hurt industry growth, because the U.S. industry is already more competitive in materials production than China, thanks to low-cost shale gas feedstocks.