Plastics Europe: Potential tariffs would hit plastics supply chains, costs, consumers

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The head of industry association Plastics Europe (Brussels) has urged political leaders to seek diplomatic solutions to escalating trade tensions between the US and Europe, warning that the imposition of tariffs will disrupt supply chains, hike costs and impact consumers.

The US accounted in 2023 for 11.7% of EU polymer exports, valued at Eur3.4 billion, and 22.2% of EU polymer imports, valued at Eur5.3 billion, Virginia Janssens, managing director at Plastics Europe, said on March 13.

The US "remains a major trade partner for the European plastics sector," she said. The import and export figures "highlight the significant trade relationship between the EU and the US in plastics, underscoring the potential economic consequences of escalating tariffs," she said.

"The imposition of tariffs, particularly on industrial goods such as plastics, will disrupt supply chains, raise costs for businesses, and negatively impact consumers on both sides of the Atlantic," Janssens said.

The European Commission on March 12 announced retaliatory tariffs on Eur26 billion of US goods, including plastics and agricultural products, in a move it called "strong but proportionate" to the US instituting a 25% tariff on all steel and aluminum imports, regardless of origin, at midnight on March 12. According to the European Commission, these products account for about $28 billion worth of goods exported to the US.

The EU's countermeasures will be introduced in two steps, starting on April 1, with full implementation on April 13. The commission also said it would restore previously suspended tariffs, beginning on April 1.

Plastics Europe, which is linked to the European chemical industry association Cefic, acknowledged the EU's decision to potentially impose retaliatory tariffs on US goods in response to the recently announced increase in US tariffs on steel and aluminum.

"While we understand the EU's need to safeguard its economic interests, we emphasise the importance of maintaining the principles of free and fair trade that are so important to fostering global economic stability and growth," Janssens said. "As a key stakeholder in the European plastics industry, we urge both the EU and US to prioritise diplomatic solutions to avoid escalating trade tensions further," she said.

Plastics Europe supports the EU's openness to negotiation, as outlined by European Commission President Ursula von der Leyen, and the call for collaborative efforts to resolve the dispute "in a manner that protects industry, jobs, and consumers in both the US and Europe," Janssens said.

The association will monitor and further evaluate with its membership "the potential impact of these tariffs on the European plastics industry," she added.

European plastics production decline

In 2023, European production of plastics declined at a steeper rate than expected, according to data released by Plastics Europe in November last year. Compared with 2022, total EU plastics production saw a sharp decline of 8.3% in 2023, to 54 million metric tons (MMt). The figure contrasted with a 3.4% global increase in plastics production and meant that Europe's share of the global plastics market declined to 12%, it said.

While Europe had maintained a positive trade balance in value terms, in tonnage terms it became a net importer of plastic resins in 2022 and of plastic finished goods in 2021, with the region's exports of plastics falling 25.4% between 2020 and 2023, it noted.

The European plastics value chain supports more than 1.5 million jobs across 51,700 companies and generated more than Eur365 billion in revenue within the EU during 2023, it said at that time.

European plastic manufacturers continue to face high production costs in comparison to other major producing regions due to factors including high energy and feedstock prices and persistent inflation, amid a sustained downturn in terms of end-user demand.

The European Commission said on March 12 that the retaliatory duties are being imposed under the bloc's Enforcement Regulation, which treats them as any other trade safeguard measures.

"As the first step in this process, a two-week stakeholder consultation will run until March 26. On the basis of the collected input, the Commission will finalize its proposal for the adoption of countermeasures, and consult Member States," the commission stated. "Once this process is completed, the Commission aims to have the legal act imposing the countermeasures in place by mid-April."

This story was originally published by S&P Global Commodity Insights' Chemical Week.