US Chemical Industry Could Be Hurt in Escalating US-China Trade Tensions


us chemical hurt - US Chemical Industry Could Be Hurt in Escalating US-China Trade TensionsThe escalating trade conflicts between the United States and China would come down hard on the US chemical industry which could suffer great losses from China’s threatened tariffs.

The US President Donald Trump announced recently that a second round of 25 percent tariffs will be imposed on $50 billion of Chinese exports, which include chemicals, lubes and plastic resins worth about $2.2 billion.

Also Read: US Consumers are the Biggest Victim of Trump’s China Tariffs

“The administration has now pit US chemical manufacturing directly against China at the front lines of this conflict,” the American Chemistry Council (ACC) said.

The representative members of the council including Dow, DuPont and other US chemical magnets have planned to invest $185 million in establishing new factories or business expansions based on current tariff rates. But the council worried that continuing trade tensions with China would drag down those plans.

“We strongly urge both the U.S. and Chinese governments to work together to come to a satisfactory and mutually beneficial decision before this situation escalates further,” the ACC President Cal Dooley said in a statement.

It may not be possible that China would make considerable concessions in the face of the intensifying trade disputes as it has been determined to boost and upgrade domestic manufacturing and economy with all efforts.

Chemicals haven’t been under the spotlight as a sector in the ongoing trade war, but are targeted by both countries in view of its importance in almost all walks of life, especially in manufacturing and construction.

“Chemistry touches 96% of all manufactured goods and is the foundation for the entire North American supply chain,” the ACC said.

The current trade dispute could pose a significant threat to investment and ultimately the smooth running of the US chemical companies.

According to the ACC, as much as half of the planned chemical investment totaling $194 billion in the US is at risk of delay or abandonment. Moreover, if China takes retaliation in the worsening conflicts, it will cost the US up to 24,000 jobs in chemicals and downstream industries.

China is one of America’s most important partners in chemical trading. The US exported 11 percent of its plastic resins to China last year, generating a trade volume of $3.2 billion.

If the 25 percent US tariffs come into force finally, a great deal of new capacity generated in the US chemical industry this year and in the future would face a severe challenge to enter Chinese markets as smoothly as before.

China has made immediate response to strike back against the US tariff threat. According to the country’s finance ministry, it would slap import duties of 25 percent on US goods worth 50 billion dollars.

It has been ready to levy 25 percent tariffs on $34 billion worth of US imports starting from July 6.

A large variety of chemical products are included in the list of China’s retaliatory tariffs, including polyethylenes, polyvinyl chloride (PVC), polycarbonate and polyamide, among others, all of which are essential and fundamental materials for most of manufactured goods.


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