US should revoke tariffs to protect chemicals, plastics trade with China - ACC

12 April 2018 18:06 Source:ICIS News

HOUSTON (ICIS)--US President Donald Trump’s administration should revoke its proposed tariffs on China steel and aluminum because of potential chemical business at risk from the ongoing trade dispute, the American Chemistry Council (ACC) said on Thursday.

“We support efforts by the Administration to resolve concerns with China, but strongly believe that these long-standing problems should be addressed through constructive negotiation,” ACC CEO Cal Dooley said during a testimony in front of the US House of Representatives Committee on Ways and Means.

Dooley suggested the most positive step for the US would be to immediately revoke the proposed steel and aluminum tariffs. Failing that, he said the Trump Administration should do the following:

- Modify the tariffs to make country exemptions permanent;
- Allow associations to request exclusions on behalf of their members;
- Allow product exclusions to all companies rather than on a company by company basis; and
- Exempt key US allies without conditions.

The ACC estimates that $5bn in US chemicals and plastics trade to China would be exposed under the tariffs that China has proposed.

“Approximately $194bn in new chemicals and plastics production capacity has been announced in the US in the past eight years,” Dooley said. “Much of the new capacity is intended for export.”

Dooley noted that about 40% of the products on China’s initial Section 301 list relate to chemicals and cover polyethylene, polyvinyl chloride (PVC), polycarbonates (PC), acrylates, and many other chemicals.

“China knows how competitive the US chemicals industry is and has very likely targeted US chemicals exports because it is an area where the US is poised to grow the most,” Dooley said. “That China has included these products on its tariff list is a recognition of the competitiveness of the US chemicals industry and the challenge it poses to China’s own fast growing chemicals industry.”

China imported 11%, or $3.2bn, of all US plastic resins in 2017.

“The effect on the American economy of the Chinese government’s proposed tariffs on chemicals and plastics goes well beyond chemical manufacturers,” Dooley said. “Dozens of other sectors that rely on chemical and plastic products including the automotive, health care, building and construction and consumer goods industries could shoulder higher related costs.”

China announced plans on Tuesday to reduce import tariffs on automobiles and other products, a potential first step towards de-escalation.

By David Haydon