China Tariffs Threaten US Chemical Sector

ACC Calls for Restraint

Escalating trade tensions between the U.S. and China threaten to derail record growth in the domestic sector, according to industry association the American Chemistry Council.
Following an increase of current tariffs on US$250 billion of goods in Lists 1-3, and an increase on List 4A tariffs, the ACC called for restraint, stating the trading relationship with China was ‘critical’
“ACC and our members continue to believe that negotiation is more effective than intimidation and retaliation. If this tariff dispute becomes a war of attrition, it has the potential to last for years, only doing more harm than good – to both sides,” said Cal Dooley, CEO of the ACC.

Harmful Tariffs

Tariffs on List 1-3 goods will rise to 30 percent from Oct. 1, while those on List 4A goods will hit 15 percent from Sept. 1. The move was announced in retaliation to China’s announcement that it would place a tariff on U$75 billion worth of U.S. goods from Sept. 1.

“U.S. chemicals manufacturers deeply value our trade relationship with China and believe it is critical to the continued expansion and success of our industry as well as a thriving domestic manufacturing sector. While we continue to support President Trump in his mission to hold China to account for its unfair practices, ACC and our members cannot support the means: harmful tariffs on our products and our customers’ products, ultimately paid for by consumers. U.S. chemicals manufacturers urge the United States and China to return to the negotiating table and rescind these destructive tariffs,” Dooley said.

Chemistry Sector to Accelerate
Despite the threat of tariffs, growth in the U.S. chemistry sector is expected to accelerate in the coming decade, according to the latest research by the ACC.

The association predicts that the “availability and cost of natural gas and natural gas liquids” will continue to drive expansion of production capacity in the country, spurring a wave of breakbulk projects.
“As we move into the second decade of the shale revolution, the U.S. chemical industry has positioned itself as a world leader, with more than $200 billion in announced investment since 2010,” Dooley said.

Protectionist policy has also failed to limit investment with the ACC stating that two-thirds of capital spending announced to date is “foreign direct investment or includes a foreign partner.”