C&EN: "Chemical makers brace for trade war"

In this week's C&EN, this article by Alex Tullo: 

...A trade war would be disruptive to the chemical industry. Canada, Mexico, and China are the top three US trading partners generally and the three leading export destinations for chemicals. Canada imported $29.5 billion worth of chemicals, excluding pharmaceuticals, from the US in 2024; Mexico imported $27.6 billion, and China, $14.7 billion.

Over the past decade, exports have become increasingly important to the US chemical industry. Because US petrochemical makers have access to cheap raw materials extracted from natural gas found in shale, they enjoy a cost advantage over their foreign counterparts. They have spent hundreds of billions of dollars on new capacity for products sold into export markets. For example, according to the Census Bureau, US exports of polyethylene and copolymers have more than doubled since 2014, hitting $16.5 billion in 2024. New tariffs imposed by other countries on products like these would chip away at the US advantage.

The US is also a major destination for exports from Canada, China, and Mexico. It imported $24.1 billion in chemicals from Canada, $13.8 billion from China, and $7.8 billion from Mexico last year.

Many US specialty and fine chemical makers depend on chemical intermediates that are produced mainly or exclusively in China. In 2019, the previous Trump administration erected tariffs of around 25% on many Chinese imports. At the time, US specialty chemical makers were able to appeal to the Office of the US Trade Representative to secure exclusions so that the raw materials they needed wouldn’t appear on duty lists.

Fewer than 20% of the exclusion requests were granted, notes Robert Helminiak, vice president of legal and government relations for the Society of Chemical Manufacturers and Affiliates (SOCMA), a trade group. Now there will be no such process, and US importers will have to pay the duty on all products.

“The executive order is explicit in that there are no exemptions,” Helminiak says.

It will be really interesting to see what the Chinese do in response. The Trump Administration folks seem to think that the Chinese will simply lower their prices (and there appears to be deflation in China already?). I suppose we shall see.