Washington — President Donald Trump's latest round of proposed tariffs on $300 billion worth of Chinese imports, coupled with the earlier rounds totaling $250 billion, risk doing serious harm to chemical and plastics materials makers, the industry's leading trade group told a Washington hearing June 19.
In stark terms, the American Chemistry Council testified that continued tariffs would be the equivalent to "the biggest tax increase that U.S. chemical manufacturers have ever experienced."
"ACC holds the position that a prolonged trade war between the United States and China — in which chemicals being subjected to higher tariffs becomes a fixture, not an exception — could reverse the fortune of the U.S. chemical manufacturing sector," Ed Brzytwa, ACC director of international trade, testified at the U.S. Trade Representative hearing.
"Our industry's future growth depends on a strong U.S.-China trade relationship, full access to China's large and growing market, and a certain and predictable trade policy, not threats of more or higher tariffs," Brzytwa said.
The hearing, which includes more than 300 witnesses stretching over seven days, is organized by the U.S. Trade Representative as a fact-finding exercise as President Trump considers putting 25 percent tariffs on $300 billion in Chinese imports.
That and the earlier $250 billion would cover the vast majority of imports from China.
ACC said the $300 billion round includes $8.5 billion in plastics and $2.5 billion in chemicals. Together with the earlier China rounds, $26.4 billion in chemical and plastics imports are or would be covered by the U.S. tariffs against China.
The plastics resin sector maintains a trade surplus with China — in contrast, other plastics segments like machinery and processing, which have a deficit — and ACC said materials makers worry about losing access to China's large market and harming the economic benefits from shale gas feedstock.
"The shale gas revolution has given U.S. chemical manufacturers unprecedented competitive advantage in producing high-demand chemistries at low cost and exporting them around the globe," he said. "The uncertainty created by the tariffs on U.S. chemicals imports, the artificial cost increases and the resulting retaliatory tariffs on our exports are threatening investments and could all but nullify the historical gains our industry has witnesses over the past 10 years.
"For U.S. chemicals manufacturers, a prolonged trade war with China could cause the gift of the shale gas revolution to whither and fade, significantly undermining our industry's global competitive advantage," he said.
Brzytwa said in an interview after his testimony that other threats of tariffs against Mexico and against autos and auto parts are also troubling to the materials industry.
"Look at the potential for tariffs the administration threatened to levy on other products — on autos, for example," he said. "We're very concerned about that. We've said that very publicly. We were very worried about Mexico tariffs because we export $23 billion a year in chemicals and plastics to Mexico, and we don't want to see Mexico retaliate against us."
"It's the bigger picture of the use of tariffs as a tool that really would impact us competitively," he said.