Trump, Trade, and Tariffs for the Chemicals Sector Part 2

When analysing the impact of the Trump Administration’s trade policies and plans to impose import duties, the immediate response of many is the impact it will have not on those selling to America, but the cost impact to end-consumers or those dependent on feedstocks to manufacture within the US.

This is the second part of a two-part article examining the chemical industry's response to the Trump Administration's trade tariffs. You can also read Trump, Trade, and Tariffs for the Chemicals Sector Part 1

As says Jason Miller, a supply chain professor at Michigan State University, notes, “Tariffs make downstream sectors less competitive and, ultimately, will be detrimental to total US manufacturing output once they are implemented.”

“In 2023, US plastics exports totaled $74.2 billion exceeding imports of $73.3 billion and resulting in a $958 million trade surplus,” notes a Plastics Today report quoting the Association’s data. “This strength underscores the industry's global leadership; however, new tariffs on key trading partners threaten supply chains, increase costs, and risk eroding this advantage.”

The US Plastics Industry Association (PLASTICS), is similarly cautious, as it fears retaliatory tariffs could impact the sectors successful trade flows. After all, compared to many chemical manufacturers, in Europe for example, America is well-supplied with raw materials, such as shale gas.

Elsewhere inside the US, other industry experts are more supportive of Trump 2.0 and plans to onshore chemical production and manufacturing. The American Mold Builders Association (AMBA), for one is keen to encourage the return of mold building in the plastics sector, as a lot of production has moved overseas in previous decades.

“AMBA continues to strongly support President Trump's efforts to level the playing field by applying tariffs on imported Chinese molds, tooling, and dies,” states Kym Conis, the trade body’s managing director. “The new combined 35% tariff rate President Trump placed on imports helps to counter the undervaluation of these critical goods, which often enter the US from China at 40 to 60% below the cost of an American-manufactured mold.”

Others fear that tariffs can only ever be disruptive to trade, particularly if they are placed on neighbouring countries.

“Each year, more than $8 billion in recycled materials cross the US-Canada border, while nearly $3.3 billion of recycled products cross the US-Mexico border,” explained Robin K. Wiener, President of the Recycled Materials Association (ReMA).

While a completely open-border policy is not practical due to reasons outside of international trade and the supply of raw materials, Wiener is quick to highlight how manufacturers across North America and beyond are co-dependent on each other. A fine network of suppliers, manufacturers, and retailers that make up the global trade network which could be easily disrupted if trade restrictions and import duties go too far.

“While we understand the Trump Administration must focus on solutions to address major problems at the border,” Weiner concludes. “The imposition of tariffs on our North American trading partners will significantly disrupt US manufacturing and recycling operations that depend on recycled material inputs.”

The debate over tariffs and trade policies under Trump 2.0 highlights a deep divide within the chemicals and plastics industries. While some groups support tariffs as a means to strengthen domestic manufacturing, others warn of supply chain disruptions and rising costs that could weaken U.S. competitiveness. With key industry associations voicing concerns over the potential fallout, the future of North American trade remains uncertain. Only time will tell how chemical companies will adapt to these evolving policies and shape the industry's long-term stability.

As Matt Seaholm, CEO and President of the US Plastics Industry Association, notes, “A strategic, measured approach to trade is critical to strengthening — not inadvertently harming — US industry.”

Whatever private opinions experts may hold over Trump’s outspoken rhetoric and sometimes controversial views, chemical industry producers, traders, and suppliers need to get serious about the impact White House policy will have.

Consequently, as the situation on tariffs further unfolds, industry leaders and policymakers must weigh the benefits of protectionist measures against the risks of disrupting a highly interconnected global market. Because much like Trump 2.0’s other policies, the decisions the administration will make on trade over the next four years will a lasting impact on the chemical sector even after he has left office.

Photo credit: Ivan Karpov on Unsplash, Freepik, & Wirestock