VINACHEM

The increasing trend towards protectionism and tariffs is a key concern for the US chemical industry, said executives at the American Chemistry Council (ACC).

“From a big picture perspective, it’s an issue I’m really worried about. Both candidates for president – their positions unfortunately don’t seem to be very different on this issue, particularly on being very aggressive with China,” said Chris Jahn, CEO of the ACC, in an interview with ICIS at the ACC Annual Meeting.

“For the chemical industry, the concern is that we’re a big winner in global trade. We have a $25 billion trade surplus, and so we are a target for retaliation when we target countries, including China,” he added.

In May, the US announced it will hike tariffs on Chinese imports of electric vehicles (EVs), batteries and other materials, starting 1 August.

Republican presidential candidate and former president Donald Trump has suggested 60% tariffs or higher on all Chinese imports.

“If we’re going to open up a trade war with China, that has the potential to have significant implications for our members in the US. And it would be unfortunate to go back to the battle days. Free and fair trade has been a good thing for manufacturing companies and our members in the US,” said Jahn.

“With cost-advantaged feedstock, our members can compete globally, and we want to continue being able to do that in the future,” he added.

The Trump administration in 2018 started to implement a broad series of tariffs on Chinese imports, including chemicals. China in turn retaliated with its own tariffs, directly impacting certain chemicals.

CHINA TARIFFS AND OVERCAPACITY

On the issue of fair and free trade, not all companies are competing on a level playing field. Chemical imports are coming into the US even without a competitive cost advantage, said Erin Kane, CEO of AdvanSix and Board chair of the ACC.

“The US in a number of industries and value chains has the cost advantage. Yet we can see imports coming in when the cost curve doesn’t suggest that [they should]. That’s the challenge we have. There are the right mechanisms globally to handle that, but they have to be used wisely,” said Kane in an interview with ICIS.

For AdvanSix, “every single one of the value chains that we play in has countervailing duties and antidumping duties already. We have navigated this, but you need to make sure that WTO rules and processes are followed accordingly”, she pointed out.

“China has put up protectionist measures for us not to participate in nylon and capro [caprolactam]… And they’ve used it to build up their capacity. They’ve built the world’s capacity over. The last 14 years have been quite interesting to watch. Their five-year plan was to be self-sufficient, and then they took it to a much bigger degree,” Kane added.

MTB REFORM BILL FOR TARIFF RELIEF

The ACC is pushing for some tariff relief through the Miscellaneous Tariff Bill (MTB) Reform Act which seeks to remove tariffs on imported products not produced in the US or in sufficient quantities. The previous MTB law expired in December 2020 and was not renewed.

“Look at the bill that was introduced. It’s everything we asked for back to when the law expired, so it’s not just [applicable to] this year. That is a big deal and this a lot of money for our members – over $1 billion… We can make the case that these products are not manufactured here, and so this is not a competitive trade issue,” said Jahn.

“And the people on [Capitol] Hill – they understand this. That might have to be a lame duck bill rather than one they do before the election. But I definitely think there’s a chance for that,” he added, pointing out that the MTB reform bill would likely be added to other legislation.   – Source: ICIS –