On July 24, industry officials said at a hearing in Washington that the Trump administration’s import tariff on Chinese fluoropolymers would have a “serious adverse” impact on US industry. At a special cross-sector symposium convened by the US trade representative, several companies and industrial organizations have accused the US government of imposing a 25% tariff on various grades of fluoropolymers from China, causing a shortage of fluoropolymer materials.
“The taxation of PTFE and other fluoropolymers from China will have a very negative impact on the domestic processing industry,” said Richard Baillie, chairman of Baillie Advanced Materials headquartered in Der of Newark, representing the fluoropolymer trade alliance. “Tax increase will reduce employment in the United States, worsen the current supply shortage and jeopardize our trade surplus.” Baillie said that he used to be the former executive of DuPont and the chairman of the Fluoroplastics Branch of the Plastics Industry Association, although he did not represent these two organizations. He said that the US fluoropolymer industry had a trade surplus of USD 15 million to China last year. At this rate, it is expected to reach USD 21 million this year.
“We benefit from the trade with China, as can be seen from the trade surplus," he said. "The fluoropolymer industry in the United States is growing and becoming stronger." He pointed out some possible challenges for the tax increase. He believes that despite the global supply shortage in the fluoropolymer industry, tax increases may worsen US companies. He noted that China currently has more than half of its production capacity and fluorite reserves, and fluorite is the raw material for the production of fluoropolymers. Today, China is an important trading partner of the United States.
Before the government hearing on July 24-25, Baillie was the first of more than 80 hearing attendees from all walks of life, and representatives from the fluoropolymer market joined his team. Daikin America, a subsidiary of Daikin in the United States, told the hearing that the taxation of Chinese products would jeopardize their investment plans in the United States. Since they are currently developing a new product to be imported into their resin manufacturing plant in China, a melt-processable fluororesin for the digital communications industry. The fluororesin is then shipped to a small Daikin plant in Massachusetts for compounding and processing. They want to transfer the capacity of this resin to Decatur's company in Alabama, but because the company’s capacity is already full, it needs new investment. Gary Stantis, deputy general manager of business development at Daikin America, said. However, in order to invest, as part of Decatur's $200 million expansion investment, Daikin must establish a market share for this new material, but the imposition of 25% tariff would make it more difficult to increase the market share.
The company told the government in a previous document that “they are more willing to move the production of this new product to the US. Just like our other products, each product requires a new production process and a lot of investment. But this can be realized only when we built a customer base and proven profitability in the US to justify our capacity expansion. In an interview after his testimony, Baillie said that Daikin is not alone in the situation.