In recent testimony before the U.S. Trade Representative (USTR) Section 301 Committee, the Society of Chemical Manufacturers & Affiliates (SOCMA) called for the delisting of Chinese-origin chemicals from the proposed Tranche 4, which would add an additional $13.2 billion in chemicals and plastics imports. SOCMA cited the profound impact 25% tariffs would place on specialty and fine chemical manufacturers. SOCMA’s testimony focused on specialty chemistry bringing uniquely manufactured substances to market, often through batch production, which means they face proportionately higher business costs than other sectors.
“Batch chemical producers are not single-product companies,” said Matthew Moedritzer, SOCMA manager for Legal & Government Relations. “Many producers have hundreds of products in their portfolios, each requiring a unique set of inputs. All such inputs are vitally important to the final product. Changing any one component, therefore, can have significant effects.”
Specialty chemical supply chains are particularly dependent on China because many inputs are unavailable elsewhere, which makes the specialty chemicals industry uniquely vulnerable to the 301 tariffs. Chemicals made up nearly half of the tariff lines delisted from U.S. Tranche 3. SOCMA testimony urged USTR to remove chemicals from Tranche 4 that were already delisted from Tranche 3. Specifically, SOCMA highlighted the pigments and flavor and fragrances sectors, which would be greatly impacted by the 25% tariffs. Many of the inputs from these industries were removed from Tranche 1 and 3.
The tariff increase will raise the cost of manufacturing for higher-value products in the U.S. and negatively impact global competitiveness. It also opens the door for Chinese companies to enter those markets, exactly what the U.S. should strive to avoid. A primary goal of USTR should be to maintain the product markets the U.S. dominates globally.
For more information, visit www.socma.com.