How Trump’s Tariffs on Chinese Chemical Products Backfired

“When the Trump administration implemented tariffs on Chinese chemical companies in 2018, administration officials said tariffs would make American chemical companies more competitive. But industry groups told regulators last week that it’s had the opposite effect.

At a Thursday hearing on the impact of the Trump administration’s tariffs against China, the American Chemistry Council (ACC), an industry group representing over 190 U.S. chemical companies, informed the International Trade Commission that imports of Chinese chemical products have instead grown continuously since the tariffs took effect in June 2018. Over $35 billion worth of chemicals were imported from China in 2021, and Chinese companies now make up a larger share of U.S. chemical imports than they did when former President Donald Trump took office in 2017.

Per the ACC, the Trump administration failed to account for American manufacturers’ reliance on intermediate products exclusively produced in China. “China is the primary source of many valuable inputs to U.S. chemical manufacturing processes, and for which few or no alternatives exist,” an ACC representative said. “It would take years, and billions of dollars, to build manufacturing capabilities for these inputs in the United States or other countries.”

Dyes stand out as some of the most notable examples of vital Chinese imports impacted by chemical tariffs. For U.S. manufacturers to produce Red 57, a red pigment commonly found in many cosmetic products, they must import 3-hydroxy-2-naphthoic acid, also known as BONA, from China. BONA is exclusively produced in China, forcing American manufacturers to bear the higher costs associated with importing these critical Chinese-made inputs for their final products.”

“Despite the attention given to the industry by the federal government in recent years, chemical companies are warning that tariffs are hurting their ability to invest new capital in their supply chains and innovate on issues like climate change. They also worry that it will slow job growth and hinder the Biden administration’s broader efforts toward restoring resilience in the supply chain while only contributing to higher costs for consumers.

“[T]ariffs are clearly not working for the chemicals and plastics sector,” the ACC said in their testimony. “[They] are making the United States a less attractive place for jobs, innovation, and plant expansion.””

How Mitch McConnell Accidentally Created An Unregulated THC Market

“Mitch McConnell didn’t know what he was doing when he passed the 2018 Farm Bill. The bill included his provision that legalized industrial hemp, a form of cannabis that can be made into a wide variety of products including cannabidiol, a non-intoxicating cannabis compound commonly called CBD. That part was intentional — the law quickly launched a multi-billion dollar industry that put the once-obscure CBD compound into lattes, seltzers and hundreds of CVS stores across the country.

But after three years it appears one of the law’s biggest impacts was entirely unintentional: It accidentally created a booming market for synthetic THC, marijuana’s primary intoxicant.

The same type of CBD that’s for sale at CVS is now being synthetically converted into THC and packaged into vape cartridges and gummy bears. Thanks to a loophole in the 2018 Farm Bill, these drugs are marketed as a “legal high” and sold online and in states where marijuana remains illegal.

But chemists warn that these drugs can contain hazardous solvents, acids and unknown compounds. When FiveThirtyEight legally purchased hemp-derived THC products for testing, we found illegal levels of THC and a variety of mystery compounds that could not be identified. There are no federal safety testing requirements for these products, and while hemp companies occasionally publish test results, some brands have been caught using fake test documents.”

“The hemp industry has quickly moved past selling just Delta-8-THC and is now offering an increasingly long list of synthetic cannabinoids that they can ship directly to your door.”

“McConnell has spent years fighting for hemp legalization and, in particular, the legalization of CBD in an effort to appease his home state’s farmers. He made hemp legalization a campaign issue in 2013 and, when the Drug Enforcement Agency blocked Kentucky’s farmers from growing CBD-rich hemp under an earlier pilot program, the senator publicly fought the agency until the DEA backed down.

When it came to writing the 2018 law, McConnell apparently didn’t want to take any chances with the DEA. His provision permanently removed hemp from the Controlled Substance Act”

“The five professional chemists we spoke to for this piece were all particularly concerned by the sale of synthetic cannabinoids like Delta-8-THC-O acetate, which are both synthetically made and synthetically designed (unlike Delta-8-THC, which can be found naturally in cannabis). These types of synthetic cannabinoids were first invented by the pharmaceutical industry and can react with our internal cannabinoid receptors in unnaturally strong ways.”

After four years of inaction, the EPA is finally regulating this superpollutant

“HFCs have only been used in appliances since the 1990s, as a replacement for ozone-depleting chemicals, but their use has grown at a terrifying rate. While HFCs still only comprise about 1 percent of total greenhouse emissions, they are thousands of times better at trapping heat than carbon over a 20-year period.”

“another big task awaits for President Joe Biden to rein in HFCs: ratifying the 2016 Kigali Amendment, the global agreement to phase down these dangerous chemicals by 85 percent before 2050. It’s one of many amendments that has been added to the Montreal Protocol since 1987, a treaty that has been used to phase out ozone-depleting chemicals.
Every one of these amendments was ratified and implemented successfully by the US —except Kigali, the one that came along just as Trump and Republicans took power and brought climate action to a standstill.”

The Trump Administration Is Still Charging 25 Percent Tariffs on Disinfectants Used To Combat COVID-19

“President Donald Trump’s tariffs are crimping supply chains for chemicals used to manufacture disinfectants and cleaning products—items that are needed to combat COVID-19 and that will be in even higher demand as the economy reopens.

In a letter sent last week to U.S. Trade Representative Robert Lighthizer, the American Chemistry Council, an industry group, highlighted dozens of items that are subject to the Trump administration’s tariffs. The list sent to Lighthizer includes various chemical building blocks used to manufacture everything from soap to detergent, and surface cleaners to bleach.”

“The Trump administration took action in March to exempt medical equipment—including face masks and personal protective equipment (PPE)—from its tariff regime. But those exclusions did not apply to chemicals, like isopropyl alcohol and the dozens of other items on the council’s list that are not strictly defined as medical equipment but remain crucial to many products used by health care workers.

Trump’s tariffs are also affecting companies that need to purchase disinfectant wipes and other cleaning products. “According to the CDC guidelines…to prevent the spread of COVID-19 it recommends the use of EPA approved disinfectant wipes,” wrote Daniel Marquardt, principal owner of Hilo Industries LLC, a Virginia-based construction contractor, in a tariff exemption request filed last month. Hilo, like many other businesses across the country, needs to import tubs of disinfectant wipes that will be “used by our customers, employees, and their customers to enable them to work and patronize safely to help combat and control COVID-19,” Marquardt wrote.

But the tariff exemption process is opaque and slow—far from the ideal way to relieve the stress tariffs are causing. Sens. Tom Carper (D–Del.) and Pat Toomey (R–Pa.) have urged the Trump administration to move more quickly and issue more tariff exemptions in order to speed the response to the pandemic, but White House trade adviser Peter Navarro has laughed off those concerns as “fake news.””

“the tariffs are making it more expensive for American businesses to make those purchases, and therefore leaving them unable to purchase as much as they might otherwise choose. Much of the Trump administration’s trade war has been a real-life lesson in what economists call a “deadweight loss”—that is, a market inefficiency that creates losses for some participants but no gains for anyone else—but rarely does it appear this obvious.”

“The Trump administration has delayed tariff payments for three months as a way to boost liquidy for American importers, but that’s little help over the long term. Tariffs on products that are necessary components of disinfectants will only make it more difficult to achieve the reopening that Trump desperately seeks.”