WASHINGTON -- The US-China trade war officially burned into the plastics materials industry on August 23. The two countries officially imposed tariffs on chemicals and plastic products worth $4.2 billion.
This amount is likely to rise rapidly, as Washington considers the next round of $200 billion worth of Chinese goods, including $25 billion in chemicals and plastics.
Tracking the daily battles of trade wars (trade operations and retaliation counter-actions) is not an easy task. August 23 is significant because the first batch of plastic resins and materials imported and exported between the two countries are subject to tariffs. .
Trade conflicts may show signs of downgrade, and China and the United States continue to conduct trade talks. At the same time, plastic materials lobby groups continue to lobby their views.
The American Chemistry Council participated in a six-day hearing in Washington on August 20th, proposing a 25% tariff. Chemical materials companies including Kraton also participated in the hearing. Or submitted a written testimony.
In short, they believe that low-cost shale gas in the United States has given US plastics producers a competitive advantage globally, and they fear that trade wars will affect their pace of entering China's fast-growing markets. On the first day of the hearing, the supervisor, Edward Blitava, told the participants: 'Adding tariffs will make China close the market for American goods, and our entire industry is preparing to supply various chemical products to this huge market in China. The trade flow between the United States and China will shrink as tariffs rise.'
The US Chemical Industry Council released an analysis report on August 22. It is expected that if the United States begins to impose tariffs on Chinese imports in the next round, China will use retaliatory actions, and US 8.8 billion US dollars of chemical and plastic products will be hit. The next round Among the $200 billion worth of tariff-levied goods, including $16.4 billion imported from China's chemical and plastic products.
The next round of tariff increases may be implemented in late September or early October, and the impact on the industry will be much greater than this round starting on August 23. The first round of tariffs only involves US$2 billion worth of US exports to China. Chemical and plastic products and Chinese exports to the United States worth $2.2 billion.
The American Chemistry Council said that the association supports the government to take action to curb China's unfair trade practices, but the substantial increase in tax-related commodities will have a 'probable irreparable impact' on the chemical supply chain.
The addition of tariffs will lead to higher raw material prices, which will make US companies less competitive in some countries and regions that have not imposed tariffs on Chinese goods. The American Chemistry Council said: 'The supply chain is not broken, it can't be easily re-established. Configured to meet US trade policy adjustments. Forcing companies to reconfigure supply chains may threaten the survival of their business activities.'
The US resin industry has a large trade surplus with China, which is different from other sectors in the plastics industry. Therefore, the resin industry is worried about losing the Chinese market.
During the 6-day hearing, more than 500 companies and institutions plan to participate in the hearing, some support, and some object to the increase of tariffs. In addition, the hearing received more than 2,000 written testimonies.
Kraton testimony
One of the testimonies came from the Houston-based Kraton Company, which asked the US government to abandon tariffs on isoprene from China because it produces styrene-isoprene-styrene (SIS) thermoplastics. The key raw material for elastomers.
Kraton said that the lack of supply of isoprene in the US market is not caused by China's unfair trade practices. The addition of tariffs will affect the competitiveness of the US in the field of SIS manufacturing, leading to the transfer of production to other parts of the world. The company said: It is believed that the tariff on isoprene will lead to the production of SIS shift to other countries in the world, because they can produce products that are more competitive than Kraton.
Chemical manufacturers and affiliated associations representing specialty chemical companies say that 'special fears' that tariffs will disrupt complex industrial supply chains, and that the US chemical manufacturing industry will suffer.
Matthew Modric, manager of the association's legal and government relations, said: 'The change in the specialty chemical supply chain is particularly difficult because specialty chemicals have exceptionally high purity and performance requirements and require special expertise and infrastructure. Tariffs must be imposed. He asked the US Trade Representative Office to communicate closely with industry professionals to ensure a reasonable channel to replace Chinese suppliers.