Plastics News: As China trade fight escalates, industry sees concerns, gains

Posted on September 19th, 2018 by plasticycle

Office of the U.S. Trade Representative. A container ship heads into a U.S. port.


Washington — U.S. plastics and chemical associations reacted with growing concern to President Donald Trump’s Sept. 17 announcement of major new tariffs on Chinese imports. But for some plastics companies in the packaging and vinyl flooring sectors, the news could be a victory.

The Trump administration said tariffs on 5,700 products would start Sept. 24, initially at 10 percent but rising to 25 percent Jan. 1, a two-step delay seen as giving supply chains some time to adjust.

The tariffs cover about $200 billion in Chinese imports, on top of duties covering $50 billion of Chinese imports in two earlier rounds in July and August.

The Washington-based Plastics Industry Association criticized the current path of tariffs and retaliatory tariffs, which now cover about half of China’s exports to the United States. It said a trade conflict puts the overall industry growth at risk.

“The administration should end its trade war and find a different approach to addressing China’s trade offenses,” the association said in a Sept. 18 statement. “Continuing along this path and imposing new tariffs puts our industry’s future growth in jeopardy.”

The U.S. announcement was met by Chinese plans to put tariffs on $60 billion in American exports, on top of $50 billion that Beijing put in place in July and August.

China has targeted the sizable U.S. plastic resin exports, including polyethylene, in previous rounds in response to U.S. tariffs.

The latest U.S. announcement keeps most of the 6,031 products on a proposed list Washington released in July, including vinyl flooring and some categories of plastic packaging.

Large U.S. vinyl flooring makers Mohawk Industries Inc. and Congoleum Corp. had testified at a hearing in August urging tariffs on Chinese imports, saying it would allow them to invest and add jobs, although opponents of the flooring tariffs said they would raise costs in U.S. home building.

Large plastics packaging firm Pactiv LLC also won tariffs on some closures and plastic packaging from China, although it appears it did not convince U.S. trade officials to add plastic tableware.

Pactiv CEO John McGrath had testified at the Washington hearing in August urging the U.S. Trade Representative’s office to include plastic tableware on its final tariffs, but the USTR’s Sept. 17 list does not include them. He said Chinese imports had caused the company to close 10 factories since 2011.

More tariffs could be on the horizon.

In a statement, Trump said that if Beijing retaliated, the U.S. would “immediately pursue” tariffs on $267 billion more in Chinese imports, covering essentially all of China’s exports to the U.S.

U.S. officials say the tariffs are needed as negotiating leverage to force changes in Chinese trade practices to protect U.S. intellectual property and technology.

“These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy,” Trump said. “For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies.”

But the American Chemistry Council urged the Trump administration to find a different path, saying that while it supported Washington’s efforts to address China’s trade practices, the U.S. government needed to work within the World Trade Organization and other institutions.

It said that the U.S. recently surpassed $202 billion in announced chemical and plastics investment across 333 projects and suggested that cutting off U.S. access to China’s huge market could risk some of that investment.

It estimated that China’s $11 billion in retaliatory tariffs on chemicals and plastics will put 55,000 U.S. jobs and $18 billion in domestic activity in question, as Chinese demand falls.

“Tariffs and quotas unnecessarily raise costs, deter innovation and economic growth, and could ultimately weaken our country’s competitive advantage,” said ACC CEO Cal Dooley.

As well, the Washington-based Window & Door Manufacturers Association said the tariffs “will do more harm to the U.S. economy than good.”

“WDMA is very disappointed with the Trump Administration’s decision to impose a tariff on the list of products from China,” said WDMA President and CEO Michael O’Brien. “These additional tariffs will likely lead to price increases for the residential and commercial construction markets and continue the threat of a trade war with China.”

The Sept. 17 U.S. tariff list did remove tariffs on some chemical and plastics products. It removed two plastic product categories, both gloves, and 140 chemical products, leaving 1,360 still on the list. ACC estimated the Sept. 17 list covers $12.9 billion in Chinese chemical and plastics imports, compared with $16.4 billion in the initial list in July.

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