A $5bn bite out of chemicals as tariffs loom for America

May, 2018

US Initiation: The threat of a trade war between America and China is increasing threat for America’s Chemical Market. It is expected that if US- China disagreement on trade escalates America’s chemicals and plastics industry stands to lose $5bn. Recently China plans to impose a heavy tariff of 179% on US sorghum, which is effective from 18th April. Sorghum is a drought-resistant crop typically used to feed livestock, and increasingly in ethanol production. White House deputy press secretary Lindsay Walters said, ‘The President has made it clear that any further illegal trade actions by China are not acceptable, including the unfair targeting of US sorghum producers.’

China’s Actions: China’s latest action to increase the tax follows increasing tension in March, is the reaction of President Trump announced global tariffs of 25% on steel and 10% on aluminum. Furthermore, China is now threatening to impose tariffs of up to 25% on more than 100 American exports companies. In which about 40% are plastics, petrochemicals, petroleum products and specialty chemicals, and the chemical industry responded by sounding the alarm. It will affect the petrochemicals, petroleum and its byproducts market. Some of these can be named as:

  • Octane improver

  • EPDM

  • Sealants

Market View: Recently, the American Chemistry Council (ACC) has said that China is one of the US chemical industry’s most important trading partners. China is importing 11%, or $3.2 billion (£2.25 billion), of all US plastic resins in 2017. These proposed tariffs could impact up to $5 billion of the chemical industry’s exports to China, Cal Dooley, the president and CEO of the American Chemistry Council. He also said, China knows the US chemicals industry is very competitive and likely targeted US chemicals exports because it is an area where America is poised for growth. In 2017, the US had a $33 billion surplus in industrial chemicals. And it is estimated to grow $73 billion by 2020. Due to the competitive advantage that the American shale gas revolution has conferred. The key chemical market in shale gas advantage value chain include olefins, polyolefins, resin ( acrylics / epoxy), and performance polymer.

– Khushboo Pandey,
Chemicals Market Analyst
Infoholic Research