U.S.-China trade war hits plastics industry

sea port containers and cranes

April 30, 2018 - The fomenting trade war being fought between the United States and China could disrupt global supply chains if tariffs on resins, processing machinery, tooling and plastic products come into effect. This could happen as early as the beginning of June.

The United States has listed injection molding machinery, extrusion machinery, blowmolding machinery, thermoforming and tooling as imports that could be hit with tariffs of 25%. In a tit-for-tat riposte, China listed low-density polyethylene (LDPE), polyolefin elastomers and plastomers (POEs, POPs), polyvinyl chloride (PVC) resin, polyamide (PA) 66 resin, aromatic and semi-aromatic PAs and their copolymers, and epoxy resin among plastic-related products that would be taxed upon import. PET sheet and film, acrylic resin and polycarbonate resin also made it to the list.

In a written statement, American Chemistry Council (ACC) President and CEO Cal Dooley said: "U.S. chemical manufacturers believe the principles of free and fair trade should apply to all members of the WTO, and that includes China. However, engaging in a trade war with one of our country's most significant trading partners is not the answer. 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.

"China is one of the U.S. chemical industry's most important trading partners, importing 11 percent, or $3.2 billion, of all U.S. plastic resins in 2017. We are particularly concerned that 40 percent of the products to which China has assigned new tariffs are chemicals, including polyethylene, PVC, polycarbonates, acrylates, and others.

"Nearly $185 billion in new chemical factories, expansions and restarts of facilities around the country are predicated on current tariff schedules, and market shifts caused by tariff increases may convince investors to do business elsewhere. We strongly urge the U.S. and China to reach a productive and meaningful agreement before any of the proposed tariff schedules go into effect."

The U.S. imported almost $109 million worth of injection molding machinery from China in 2016, while extruder imports were much lower at around $12.4 million. Blowmolding machinery imports from China were valued at about $4.2 million. For its part, the U.S. exported over 152,000 tonnes of LDPE (including LLDPE) to China in 2016, valued at $215 million. U.S. polycarbonate exports to China, meanwhile, were valued at almost $325 million (129,000 tonnes).

Source: Plastics Today