Industry Trade Groups React to Trump’s Tariffs

Industry Trade Groups React to Trump’s Tariffs

President Trump signed an executive order imposing tariffs on imports from Canada, Mexico, and China, citing the extraordinary threat posed by undocumented immigrants and illegal drugs as the driving force behind the decision. The tariffs, which include a 25% levy on goods from Mexico and Canada, and an additional 10% on Chinese products, are expected to impact a wide range of industries, including chemicals, which rely on international trade for raw materials and finished products.

However, on February 3, Trump agreed to delay the implementation of tariffs on Mexico for one month, following an agreement with Mexican President Andrés Manuel López Obrador. Under the new arrangement, Mexico will deploy 10,000 troops to its border to combat the flow of illegal drugs entering the United States. This temporary delay was seen as a step toward addressing concerns about drug trafficking and border security while allowing additional time for negotiations.

Industry trade groups have responded swiftly to the announcement, expressing concerns over the potential consequences of the tariffs on their sectors. The American Chemistry Council (ACC), the Society of Chemical Manufacturers and Affiliates (SOCMA), and the American Fuel and Petrochemical Manufacturers (AFPM) have issued statements emphasizing the critical role that trade with Mexico and Canada plays in supporting the chemical industry supply chain.

The U.S. chemical industry is a major contributor to the nation’s economy, being the second-largest export manufacturing sector. In 2023, the chemical industry posted a trade surplus exceeding $30 billion, with exports supporting nearly 200,000 jobs across the country. Both Canada and Mexico are vital trading partners, representing the largest markets for U.S. chemical products. The ACC highlighted the importance of maintaining strong trade relations with these countries to sustain the stability and growth of the U.S. chemical sector.

The ACC also reiterated its support for the United States-Mexico-Canada Agreement (USMCA), a trade deal that was designed to enhance economic cooperation and create a more stable trade environment within North America. The trade association called on the U.S. administration and other stakeholders to work together toward a solution that addresses the concerns behind the executive orders, while ensuring that the chemical industry continues to have access to critical raw materials and markets.

“ACC wants to work constructively with the administration to advance a trade agenda that addresses genuine challenges to our supply chain resiliency,” said the organization in its statement. “Together, we can help stop circumvention of tariff protections and advantage U.S.-based production and exports by expanding science-based regulatory approaches that will continue to grow our competitiveness while also ensuring advantage to trading with trusted partners.”

Similarly, SOCMA raised alarms over the potential disruption that the new tariffs could cause for the specialty chemicals sector. The organization warned that the tariffs could undermine the stability of well-established supply chains, which have been built on the foundation of the USMCA and other previous trade agreements. SOCMA pointed out that many specialty chemical manufacturers rely on the smooth and efficient movement of raw materials, intermediates, and finished goods across borders to maintain production schedules and meet customer demands.

“For years, the USMCA has fostered a stable and predictable trade environment for the chemical industry, supporting integrated North American supply networks,” SOCMA explained. “These new tariffs threaten that stability, creating uncertainty for manufacturers that rely on the seamless movement of raw materials, intermediates, and finished products across borders. The additional costs and regulatory complications introduced by these tariffs could have far-reaching effects on production efficiency, global competitiveness, and innovation within our sector.”

Jennifer Abril, President and CEO of SOCMA, called for a more targeted and thoughtful approach to addressing trade issues, one that minimizes disruptions to the chemical supply chain and does not unduly burden manufacturers with additional costs and operational challenges. Abril urged the administration to implement policies that protect domestic interests while preserving the benefits of the USMCA, which has been essential to the continued success of North America’s chemical industry.

Likewise, Chet Thompson, President and CEO of AFPM, emphasized the significant role that trade with Canada and Mexico plays in the U.S. refining industry. He noted that U.S. refiners rely on crude oil imports from both countries to produce affordable fuel and refined products for domestic and international markets. Thompson expressed hope that the government would quickly resolve the tariff situation to avoid any negative effects on consumers and the wider economy.

“We are hopeful a resolution can be quickly reached with our North American neighbors so that crude oil, refined products, and petrochemicals are removed from the tariff schedule before consumers feel the impact,” Thompson said.

While the executive orders and subsequent tariffs have sparked concern across various sectors, industry trade groups are calling for collaborative efforts to find solutions that balance national security concerns with the need to protect the U.S. economy and maintain smooth trade relationships with essential partners like Mexico and Canada. As negotiations continue, the chemical industry will be closely monitoring the developments to ensure that its operations and supply chains remain resilient and efficient amidst these changes in trade policy.

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