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Taxes on Additional $11 Billion in Chemicals and Plastics Products Add to Rising Tide of Uncertainty over Long-Term U.S. Chemical Manufacturing Competitiveness

WASHINGTON (June 19, 2019) – The U.S. Administration must scale back tariffs immediately on $26.4 billion in chemicals and plastics imports from China to ensure continued, duty-free access to inputs that are critical to U.S. manufacturing competitiveness, the American Chemistry Council (ACC) told members of the interagency Section 301 Committee during a hearing on Wednesday. The hearing follows an escalation last month in the ongoing dispute with China, which culminated in a new list (‘List 4’) of Chinese imports designated for a 25 percent tariff. The proposed List 4 includes taxes on an additional $11 billion in plastics and chemicals imports.

For ACC, the fourth round of tariffs marks a stunning and confusing reversal, noting for the Committee that the Administration has put back 114 of the 141 chemicals and plastics products that it had previously removed from List 3. “To ACC and our members, it appeared that the Administration had determined that these 141 products were essential to U.S. manufacturing and agriculture, and therefore should not be subject to tariffs,” said Ed Brzytwa, ACC director of international trade. “The Administration’s reversal on these products is surprising, injecting more confusion and greater uncertainty in the U.S. chemical sector.”

ACC also noted the confusion surrounding the significant overlap between the chemical products in the Miscellaneous Tariff Bill and all the China Section 301 tariff lists. “These products should not be subjected to any additional tariffs, as the U.S. International Trade Commission and Congress deemed them essential to U.S. manufacturing competitiveness,” Brzytwa said. Making matters worse, China has retaliated against the United States by applying tariffs on $11 billion in imports of U.S.-made chemicals and plastics, causing U.S. exports of those products to China to decrease by 24 percent from December 2017-2018.

The rising tide of uncertainty caused by the Administration’s unpredictable and often conflicting tariff actions has begun to cast a shadow over the wave of new chemical industry investment announced over the past decade in the United States. “The shale gas revolution has given U.S. chemicals manufacturers an unprecedented competitive advantage in producing high-demand chemistries at low cost and exporting them around the globe,” ACC said. “The uncertainty created by the tariffs on U.S. chemicals imports, the artificial cost increases, and the resulting retaliatory tariffs on our exports are threatening investments – and could all but nullify the historical gains our industry has witnessed over the past ten years.”

ACC urged the Administration to resolve the trade dispute with China quickly so the United States can begin to follow through on its earlier commitment to eliminate tariffs around the globe. “At the G7 Summit in Canada in June 2018, the Administration stated that one of its goals is to eliminate tariffs globally,” Brzytwa reminded officials at the hearing. “ACC and our members support this goal and welcome opportunities to assist the Administration in achieving it immediately.”

» Download a copy of ACC’s detailed public comments on List 4.

» Download a copy of ACC’s oral testimony.

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