Chemical Industry Sees Threat to U.S. Jobs in China Trade Spat

(Bloomberg) -- Hundreds of thousands of jobs in the U.S. chemical industry are at risk as a new round of proposed tariffs against Chinese-made goods threatens to raise costs enough to change “the value proposition” of domestic manufacturing, a trade group warned Wednesday.

If President Donald Trump’s trade war continues to escalate with retaliatory measures from China, demand for American goods will plummet, prompting layoffs at plants and pushing some chemical makers to move production overseas, said Ed Brzytwa, director of international trade for the American Chemistry Council.

“The bigger picture here is that U.S. trade policy is making it much, much more difficult for chemical manufacturers to do business here in the United States,” Brzytwa said. “Around 30 percent of all chemical industry jobs are export dependent. Fewer exports means fewer jobs.”

Tuesday’s proposal to extend tariffs to another $200 billion of Chinese goods came after plastic and chemical companies have been warning for months that Trump’s trade war could damage their business at home and abroad. The new taxes cover a wide swath of chemicals and materials U.S. manufacturers import from China.

460,000 Jobs

Trump’s proposed 25 percent tariff on steel is particularly growth-stifling, he said, because construction of new chemical and plastic plant construction requires such massive amounts of the material. Already, some sites are seeing delivery and scheduling problems as a result of the tariffs, according to the trade group.

The Chemistry Council has a list of 325 manufacturing projects under way in the U.S., representing a cumulative investment of $194.3 billion. If these projects are delayed or canceled, the 460,000 jobs they generated will cease to exist, Brzytwa said.

“The low-cost natural gas feedstock here in the United States makes it an attractive place for chemical plants under a scenario where there are no tariffs, where costs are low,” he said. “But when there are are tariffs, the value proposition changes.”

China meanwhile consumes billions of dollars worth of U.S. chemical products each year. In 2017, the Asian nation purchased $3.2 billion worth of plastic resins from the U.S., and the number is projected to grow along with the burgeoning Chinese middle class.

The tariff burden on American chemicals will be felt throughout the supply chain, hurting the business of U.S. automakers, agriculture and health care companies, Brzytwa predicted.

The Chemistry Council joined with the American Petroleum Institute and the Association of American Railroads on Wednesday to publish a commentary in the Washington Examiner denouncing the new tariffs.

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