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As U.S.-China tariffs start, execs worry over prolonged conflict

Plastics News Staff | PLASTICS NEWS

As a potential trade war kicks off between China and the United States, plastics industry executives facing 25 percent tariffs on their products are expressing worry over damage from a prolonged conflict.

Tariffs went into effect July 6 on plastics processing machinery and molds exported from China to the United States, while the resin industry could very likely face its own 25 percent additional tariffs in the next few weeks.

The immediate impact could be muffled, as representatives of Chinese plastics machinery companies in the United States said they've been stocking up and building inventory ahead of the tariffs to provide a short-term cushion.

CH-America, which sells Chen Hsong presses in the U.S., bought a large number of machines in anticipation of the tariffs. Ken Heyse, president of the Torrington, Conn., firm, said there will be a transition period.

"It's not like everybody is going to wake up Monday morning to higher prices," Heyse said.

But it's the larger trade picture that's also worrying executives, particularly President Donald Trump's formal proposal for 20 percent tariffs on imported cars and China's retaliatory tariffs, which kicked off July 6, on U.S. agriculture and auto exports on U.S. exports.

"It's all connected, at least in my mind. I'm a little more concerned about what happens on the macroeconomic scale," said John Beary, president of Yizumi-HPM Corp., the U.S. unit of China's Guangdong Yizumi Precision Machinery Co. Ltd.

Machinery executives said plastics industry customers have only recently started to ask about impacts of the tariffs. But the tariffs -- which cover a broad range of industrial goods, not just plastics machinery -- probably haven't sunk in yet with many processors, they said.

"I would say the last two to three weeks, the majority of our customers have at least mentioned it as we're quoting new machine sales opportunities," Beary said.

For the plastics materials sector, the story is a little different. Tariffs have not started for resins, but both the United States and China are planning duties on plastics materials in a second round of tariffs that could happen in the next few weeks.

They're in a sort of wait and see mode. The larger hit could come for U.S. resin makers, since China has said it plans 25 percent tariffs on about $3 billion in U.S. plastic resin exports.

The American Chemistry Council, the largest trade association for U.S. resin makers, is growing more concerned over trade, including the potential tariffs on automotive imports, and has lobbied against several recent Trump administration tariff plans.

An ACC executive said some of its members are actively studying whether escalating tariff conflicts, with China and other countries, could force production offshore.

"Clearly we're concerned about the overall trend line of U.S. trade policy, particularly the amount of retaliation our industry is experiencing now or will experience," said Edward Brzytwa, director of international trade for the Washington-based association. "We're getting to the point where the trend line is bad, and it could get much, much worse."


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