ACC Principles for a Competitive U.S. Trade Policy

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Ryan Baldwin
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U.S. chemical manufacturers support comprehensive and sensible trade policy solutions that help maximize our competitive advantage, grow our exports, and create jobs.

ACC’s principles for a competitive U.S. trade policy focus on (1) eliminating tariffs; (2) reducing non-tariff barriers to trade; and (3) modernizing the World Trade Organization (WTO) so it can continue to help its members negotiate trade agreements, settle trade disputes, and work together to protect and enforce free and fair trade around the globe.

Trade Policy Principles

1. Tariff Elimination

ACC supports eliminating tariffs.

  • Tariffs are taxes on imported goods (like chemicals) that artificially increase the cost of purchasing those goods. The importing company almost always pays the tariff – if it can afford it.
  • U.S.-imposed tariffs hurt the U.S. chemicals industry by cutting companies off from critical materials and inputs to manufacturing that may be unavailable or cost-prohibitive to produce in the United States.
  • Manufacturers that do pay the tariff ultimately face a difficult decision: either absorb the costs at their expense, or pass the increased costs on to customer industries. Ultimately, American consumers and families are the ones who often pay for the tariffs in the form of more expensive goods and services.
  • Retaliatory tariffs by other countries also hurt U.S. chemicals manufacturing by artificially raising the price of our products in the global marketplace, causing demand to sag for U.S.-produced chemistries. Overall, tariffs can disrupt globally integrated supply chains and create uncertainty for firms that would otherwise be eager to invest in the United States.

Eliminating tariffs would yield significant cost savings for U.S. chemicals manufacturers.

  • Eliminating U.S. tariffs under certain trade enforcement actions would enable key trading partners (e.g., Canada, China, the European Union, and Mexico) to rescind their retaliatory tariffs on imports of U.S. chemicals into their countries.
  • Negotiating trade agreements with key U.S. trading partners (e.g., the European Union and Japan) would help eliminate bilateral chemicals tariffs in those markets, enabling trade in inputs critical to U.S. manufacturing.
  • The reduced trading costs and more predictable trading environment can help continue to attract investment in U.S. chemicals manufacturing and ensure that the United States can maintain its position as one of the world’s leading, low-cost supplier of chemicals.

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2. Reducing Non-Tariff Barriers

ACC supports U.S. efforts to eliminate non-tariff barriers to trade by pursuing new trade agreements and expanding existing ones.

  • Non-tariff barriers to trade include any obstacle other than a tariff that can impede the free exchange of chemicals, feedstocks, and other essential materials among the U.S. and other countries.
  • For example, technical barriers occur when chemical regulatory processes or labeling requirements may differ between countries or regions, which can inhibit U.S. exports.
  • Rules of Origin, which determine how much of a substance must be manufactured domestically to be exempt from a tariff, can be overly complex and difficult to comply with, which impedes trade.
  • Import quotas (e.g., for steel and aluminum) can slow U.S. chemical manufacturing growth by making it more difficult, time-consuming, and costly to import materials to build steel-intensive chemical plants, trucks, railcars, pipeline, and equipment.

Trade agreements can serve two important purposes: to directly eliminate tariffs, and to reduce non-tariff barriers to trade through greater regulatory cooperation between trading partners.

  • ACC has testified in support of the U.S. entering trade negotiations with the EU, UK, and Japan to reduce technical barriers to trade, avoid import quotas, and streamline rules of origin requirements.
  • The Sectoral Annex for Chemical Substances in the United States-Mexico-Canada Agreement (USMCA) is a great model for how trade agreements can foster great cooperation between governments on chemical regulatory issues.
  • The ongoing U.S.-Canadian Regulatory Cooperation Council (RCC) also has made some significant progress in coordination and cooperation on chemical assessments.

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3. WTO Modernization

ACC supports modernizing the World Trade Organization (WTO) and protecting, promoting, and enforcing its principles for free and fair trade around the globe.

  • ACC and our global partners in the International Council of Chemical Associations (ICCA) view the WTO as a champion for fostering economic growth and innovation, establishing fair competition, and driving foreign investment and development around the world.
  • Free and open trade raises standards of living, lifts people out of poverty, and connects people and businesses around the world.
  • Our industry and communities around the globe stand to benefit when the WTO addresses both tariffs and non-tariff barriers to trade – both for chemicals manufacturers and the sectors that depend on chemicals.

ACC recommends that the United States spearhead a coalition of like-minded governments to strengthen the WTO and its principles.

  • World Trade OrganizationWTO modernization should develop and apply an enforcement protocol to address state-owned enterprises and illegal subsidization of industries inconsistent with existing WTO Rules; develop new rules on protecting and enforcing trade secrets; and act to eliminate forced technology transfer.
  • WTO modernization also provides opportunities for preventing trade barriers through regulatory cooperation; ensuring the free flow of data across borders; and reducing barriers to foreign direct investment and services trade.
  • The chemicals industry urges WTO Members to cease and roll back the escalation of tariff increases and to tackle the underlying challenges that threaten support for trade – the lack of progress regarding tariff liberalization, enforcement options to ensure fair competition, rules-setting on subsidies and state interventions, and the Dispute Settlement crisis.
  • Without a focus on the root cause of trade challenges, tariff increases will only further distort trade and disrupt supply chains.

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