VINACHEM

The US election could see Donald Trump return as president with majorities in both legislative chambers, which could bring a reduction in excessive red tape, weaker support for electric vehicles (EVs) and impose even more ponderous tariffs and trade restrictions.

Incumbent President Joe Biden has dropped out of the race, and current polls show Trump ahead in the election

The House of Representatives and the Senate are closely split between the nation’s two major parties, so the Republican party could obtain majorities in both legislative chambers

Regardless of who wins the presidential election on 5 November, the outlook remains pessimistic for tariff relief and trade deals in the US

US TRADE POLICY WILL REMAIN RESTRICTIVE

Regardless of who wins the presidential election, US trade policy will remain restrictive, which could leave the nation’s chemical exports vulnerable to retaliatory tariffs imposed during a trade dispute. Also, tariffs could increase the cost of imports of critical chemical intermediates.

Biden’s campaign website did not discuss trade policy, and he recently dropped out of the race. But he maintained many of the tariffs that Trump introduced during his presidency in 2016-2020. In addition, Biden raised tariffs on EVs from China. He signed bills passed by Congress that required local content rules for government programs.

Trump’s platform proposed a baseline tariff, with the candidate mentioning 10% for most imports. For China, he mentioned tariffs of more than 60% during an interview on the television program Fox News.

Trump’s campaign website proposes a reciprocal trade act, under which the US could match tariffs that another country imposes on its exports. Although the platform concedes that reductions are possible, the proposal focuses on the potential of higher tariffs.

TRUMP TO ROLL BACK BIDEN’S EV POLICIES

Biden did not mention EVs on his campaign website. But during his presidential term, the federal government used multiple laws and regulatory statutes to promote EV adoption.

If Trump becomes president, he has pledged to cancel what he calls the electric vehicle mandate. He specified many of Biden’s policies that encouraged the adoption of EVs.

EVs typically consume more plastics on a per unit basis than automobiles powered by internal combustion engines (ICEs). EVs also pose different material challenges, which is increasing demand for different plastics and compounds.

Policies that prolong the use of ICE-based vehicles could extend the operating life of the nation’s refineries. Companies could be more willing to invest in maintenance and repairs if they are confident that they could recoup their investments.

Refineries produce many building block chemicals, such as propylene, benzene, toluene and mixed xylenes (MX).

BIDEN, TRUMP PRESENT EXTREMES ON CHEM REGULATIONS

Biden and Trump lay on opposite extremes of regulations and policy.

Under Biden, the federal government has adopted numerous regulations, many of which the chemical industry has said provided them with little benefit given the time and expense of compliance.

The past six months has been described as the worst regulatory environment that the chemical industry has ever seen.

That burdensome regulatory climate could persist if a Democrat wins the election, since personnel from the Biden administration could remain in place.

The following lists some of the regulatory policies that could either persist under a Democratic administration or weaken under a Trump administration:

The Environmental Protection Agency (EPA) has adopted a whole chemical approach in determining whether a substance poses an unreasonable risk under the nation’s main chemical-safety program, known as the Toxic Substances Control Act (TSCA). The regulator is currently reviewing vinyl chloride monomer (VCM), acrylonitrile (ACN) and aniline, a feedstock used to make methylene diphenyl diisocyanate (MDI).

Changes to the Clean Waters Act, the Risk Management Program (RMP) and the Hazard Communication Standard that were made by Biden.

Biden has promoted environmental justice throughout the federal government. Environmental justice could make it harder for chemical companies to expand existing plants or build new ones.

Because these are federal policies, a different president could reverse them.

Trump could try to unravel some of Biden’s rules to the degree possible under executive authority. However, some of the rules will persist because of entrenched bureaucracy or because they are final.

The pace of new regulations would likely slow under a Trump presidency. He has pledged to restore his order that for every new regulation introduced by the federal government, two existing ones must be eliminated.

OTHER POLICY DIFFERENCES

Superfund tax: If Trump wins the presidency and Republicans win the legislative branch, that could set up a repeal of the Superfund tax, which imposes taxes on several building-block chemicals and their derivatives. Republican legislators have already introduced bills to repeal the tax.

Trump tax cuts: Trump has pledged that he would make his 2017 tax cuts permanent. These are set to expire at the end of 2025 from his previous term in 2016-2020.

Oil production: Biden has imposed several restrictions on oil and gas production on federal land and on offshore leases, although this did not stop production from surging in the Permian Basin, much of which is outside of government control. Trump has pledged to remove those restrictions.   – Source: ICIS –