United States President Donald Trump’s announcement, 10 May, to slap 25% additional tariffs on plastics exports to China could increase opportunities for European plastics exporters, experts have told Plastics News Europe.
Mike Boswell, managing director of UK-based plastics products supplier Plastribution, said: “Sales could increase to the US, depending on which items, as US products will become more expensive because of duty barriers.” The former British Plastics Federation president said time would tell what “could be substituted in terms of finished products.”
Trump committed to increase tariffs from 10% to 25% on products with an annual trade value of around $200/€179.6bn worth of Chinese goods and to introduce fresh ones on another $325/€292bn worth “shortly” – his officials are consulting on this proposal.
The top three US imports of Chinese goods facing the tariff increase are telecommunications equipment (annual value of imports $19.1/€17.15bn), computer circuit boards ($12.5 bn/€11.22bn) and processing units ($5.6bn/€5.03bn), according to US International Trade Commission data.
All these goods include plastics. Vinyl tile floor coverings ($2.5bn/€2.24bn) number eight on the list - are directly targeted. Other commodities affected include other plastic floor and wall coverings, tubes, hoses, boxes, bags, gloves and rain jackets, as well as plastic injection moulds and machinery for working plastics. They also cover a wide range of plasticisers and plastics waste.
According to the EU’s statistical office Eurostat, China is the world’s largest plastics producer, accounting for 29.4% of global plastics production, followed by Europe (18.5%) and NAFTA – the US, Canada and Mexico (17.7%).
The decision to put tariffs on Chinese exports of these products supplied to the US by Chinese manufacturers could increase the EU’s sales to the US as a result.
The EU exported €57.5bn worth of plastics in 2018, up from €55.8bn in 2017. And EU plastics exports to the US were worth €8.2bn in 2018 and €7.7bn in 2017, Eurostat said.
A spokesperson from European association of plastics manufacturers Plastics Europe said the European plastic industry “has a good and long-standing relationship with many countries” in terms of trade. The US is already the EU’s top destination for plastics processing products and second highest for manufactured products, the organisation notes in its ‘Plastics, the Facts 2018’ publication.
In 2017, the proportion of EU plastics processing exports sent to the US were 15% of the total, ahead of Switzerland (11%) and China (9%). Some 13% of extra-EU (trade outside the EU) plastics manufacturing exports went to the US, behind Turkey (15%) and just ahead of China (12%).
A US government statement released May 9 in the US Federal Register said the US and China had been trying to reach a trade deal since December 1, 2018.
“In the most recent negotiations, China has chosen to retreat from specific commitments agreed to in earlier rounds” and, because of the lack of progress, Trump asked the US Trade Representative “to increase the rate of additional duty to 25 percent” on a range of tariff lines.
This would be paid over and above any pre-existing duties the US may have levied on these Chinese plastic sector exports.
The new tariffs will only apply to cargoes leaving China after May 10. But, coming on top of tariffs on $250bn/€224.5bn worth of goods in December 2018, China accused the US of starting “the largest trade war in economic history”.
The world’s most populous country hit back with additional tariffs on $60/€54bn of US imports into China, which includes plastic goods such as apparel, shoes and furniture; plastics manufacturing machinery; caps; primary plastics shapes; and plasticisers. This in theory could open more China export market sales up for European producers, now that American competitors are hobbled. The EU already has a significant export trade in plastics items to China, with international trade data indicating that this was worth €6bn in 2017, of which sales of EU-made plastics tubes, pipes, hoses and fittings generated receipts of €390 million, for instance.
On 23 May, China ministry of commerce spokesperson Gao Feng said: “If the US would like to keep on negotiating it should, with sincerity, adjust its wrong actions. Only then can talks continue.”
At the time of writing, Trump showed no signs of backing down either.