US chemicals industry testifies before ITC on continued harm caused by Section 301 tariffs

The American Chemistry Council (ACC) testified today before the United States International Trade Commission (ITC) as part of the ITC’s factfinding investigation into the “Economic Impact of Section 232 and 301 Tariffs on U.S. Industries” (Inv. No. 332-591). Prior to the hearing, ACC filed comments with the ITC detailing the detrimental effects of tariffs on the U.S. business of chemistry’s ability to invest in innovate new products, hire more American workers, and remain competitive globally.

In his oral testimony, ACC Director of Global Affairs, Jason Bernstein, highlighted a key difference between the effects of tariffs on imports of end-use products as opposed to intermediate inputs, which are essential building blocks to manufacturing processes in the United States and ultimately help strengthen U.S. manufacturing competitiveness. “We think it is particularly relevant to look not just at the effects on industries that produce ‘final’ or consumer end-products, but also on the industries that produce intermediate inputs, like chemicals and plastics,” Bernstein told the ITC. “The tariffs have disrupted the U.S. chemical industry’s supply chains and business operations. Most of all, they continue to undermine the U.S. Administration’s objectives to make our supply chains more resilient, rebuild and fortify U.S. infrastructure, and cultivate policies that promote American economic competitiveness.”

Indeed, chemistry touches many facets of the Biden Administration’s February 24 Executive Order on America’s Supply Chains, including semiconductors, high-capacity batteries, and critical minerals. “Many of our members are finding it increasingly difficult to meet the objectives of these initiatives while these tariffs remain in place,” Bernstein said. The U.S. chemicals sector is among the hardest hit by the tariffs, affecting almost three-quarters, or $20 billion, in U.S. chemicals industry imports. “While several sectors saw much higher tariffs overall, tariff rate increases, and/or share of products affected, chemicals were among the top sectors where most of the 301 tariffs were paid,” Bernstein explained to the ITC.

A recent study by Trade Partnership Worldwide found that, despite the Section 301 tariffs, aggregate U.S. imports of chemicals from China actually increased, in large part because there are few if no alternatives to inputs produced in China. “Many of the Administration’s initiatives are focused on increasing supply chain resiliency and promoting domestic production,” Bernstein reiterated to the ITC. “Keeping tariffs in place when they clearly increase the cost of doing business in the U.S. runs counter to this objective.”