Regulations & EHS&S

SOCMA calls on USTR to delist chemicals from Chinese tariffs

The Society of Chemical Manufacturers & Affiliates (SOCMA) testified last Wednesday before the US Trade Representative (USTR) Section 301 Committee, requesting that all Chinese-origin chemicals be removed from the latest list of proposed tariffs because of the disproportionate impact they will have on the specialty chemical sector.  
Many, if not most, chemical supply chains touch China. Accordingly, SOCMA is increasingly concerned that the proposed additional 10-25 percent tariff on $200 billion in Chinese goods will have a profoundly negative effect on U.S. specialty chemical manufacturing.

In testimony to the Section 301 Committee, Matt Moedritzer, SOCMA Manager of Legal and Government Relations, emphasized three particular aspects of specialty chemical manufacturing:

  1. Alternative sources are finite because specialty chemicals – as the name implies – are specially made to meet particular purity, quality and performance demands;
  2. U.S. chemical manufacturing is a value-added industry in which manufacturers along the value chain must import chemicals they then use to manufacture new chemicals; and
  3. The combined effect of proposed tariffs and Chinese retaliatory tariffs may overwhelm some small- and medium-sized U.S. specialty chemical manufacturers.
By putting tariffs on raw materials or intermediates coming into the US, the Administration is aiding China’s “Made in China 2025” plan. This increase in tariffs will raise the cost of manufacturing higher-value products in the U.S. and make such products less competitive globally. By keeping the status quo, domestic specialty and fine chemical manufacturers remain competitive in the global market because Chinese companies will not be incentivized to enter these high-end, technically challenging and expensive-to-enter markets.

Specialty chemical sectors are driven by intellectual property, and SOCMA supports efforts by the Administration to resolve long-standing concerns over Chinese intellectual property theft. Nevertheless, when combined with the fact that one-fifth of China’s latest retaliatory lists are chemicals, these proposed tariffs will create a disproportionate competitive disadvantage. SOCMA also supports the Administration’s goal to reach zero-tariff trade, but imposing heavy taxation on domestic specialty chemical manufacturers – made worse by retaliatory tariffs – is not the proper method to achieve that aim.

SOCMA encouraged the Section 301 Committee to remove the listed chemicals, specifically the hundreds of individual product lines SOCMA will provide in comments.