If the US government publishes a second tariff list that excludes $2.2 billion in chemicals and plastics, it could cost the US chemical industry thousands of jobs and billions of dollars in investment, the American Chemistry Council. (ACC) warned.
On July 24, the US Trade Representative Office (USTR) held a hearing on the second round of sanctions against China. The second round targeted 284 items worth $16 billion in imports. Semiconductor-related, plastic and rubber products. According to the amount, it accounts for nearly 50% of the total. There are many American companies with factories in China, and relevant industries are expressing opposition.
When ACC International Trade Director Ed Brzytwa testified, he told officials of the US Trade Representative Office that the proposed tariff list for Chinese imports under Section 301 occurred at a critical moment in the development of the US chemical industry.
Brzytwa said: '(The taxation action will make the cost of US products rise, not only our member companies, but also downstream industries that buy US-made chemicals, such as agriculture and manufacturing.'
The ACC pointed out that low-cost chemical production in the United States attracted more than $194 billion in new investments, triggering a renaissance in US manufacturing.
The ACC warned that the US tax increase and the resulting retaliation would destroy the process.
'Chemicals and plastics appearing in Listing 2 have caused retaliatory tariffs from China, inadvertently allowing China to take advantage of our growing industry,' Brzytwa said.
'Because of the lower cost of shale gas manufacturing chemicals, it is conducive to exports. If the United States does not impose tariffs, China will not take retaliatory measures, and US chemical producers have a competitive advantage over Chinese producers.'
The ACC warned that the United States' increased tariffs and the resulting retaliation would undermine the process. 'These tariffs will weaken the competitiveness of the US chemical industry and the entire United States.'
Brzytwa mentioned the $16 billion tariff that the US plans to impose on Chinese goods. This is the second in a second round of $50 billion tariffs after the steel and aluminum levy in March.
In the first round, the $34 billion tariff on Chinese goods was implemented on July 6. In response, China imposed tariffs on US goods of the same value, mainly agricultural products and automobiles.
The second round of $16 billion in tariffs will involve chemicals and plastics, and China has issued a list of retaliatory tariffs with numerous chemicals and plastics.
US President Donald Trump also announced plans to impose a $200 billion tariff on Chinese goods, including a range of chemicals and plastics, but the list will not be implemented until September. There is a round of public comment and hearing before.
As Sino-US trade tensions escalate, the US Chemical Industry Trade Organization strongly opposes any tariffs involving chemicals.
According to Platts, a large number of cheap US ethane prompted chemical manufacturers to commit to build a large number of steam cracker and derivative plants in the US Gulf Coast, Pennsylvania, and even Ohio. The first plants were launched in 2017.
In addition, five plants will be commissioned by 2019, including ExxonMobil's upcoming 1.5 million tons/year cracker in Baytown, Texas.
Of the 13 polyethylene plants that started construction in the same period, 7 have been put into production, and 6 will be put into production this year and next.
The second or third wave of production of new crackers and derivatives will come in 2020 and beyond, including Shell's integrated facility in western Pennsylvania, the first ethane cracking complex in the Northeastern United States.
Most, if not all, of the resin from the new plant will be used for export, most of which will target Asia, especially China.
However, if China imposes tariffs on US chemicals and resins as expected, the United States will lose its competitive advantage from cheap ethane compared to the expensive oil crackers in Asia.
Brzytwa said 'Because of the lower cost of shale gas manufacturing chemicals, it is conducive to exports. If the United States does not impose tariffs, China will not take retaliatory measures, and US chemical producers have a competitive advantage over Chinese producers.'
The US $16 billion tariff list for Chinese products includes: lubricants, various grades of polyethylene used to make plastic bags and food packaging, expandable polystyrene for making foam food containers, and for manufacturing automobiles. Plastic polypropylene. The amount of such chemicals imported from China is very small.
The ACC pointed out that 54 of the 114 products in China's second list are chemicals, plastics and plastics, which will affect US exports of $5.4 billion to China.
Brzytwa said: 'We believe that China's future may target (more) US chemical exports, because this is the industry that the United States is expected to grow the most.'
Brzytwa said that trade problems with China can be resolved through negotiations under the rules of the World Trade Organization (WTO), rather than 'customs blunt instruments that make the world's most important economic relations more difficult.'
The American Petroleum Institute (API) also said at the hearing that the government's tariffs on steel and other imported goods have increased the difficulty of purchasing parts, which in turn damaged the oil and gas industry.