The confirmation by America that it will now cost UK chemical businesses 10% more to export what they make to our biggest single market is another blow to our industry and to our manufacturing-wide customer base. On top of paying energy bills which are 400% higher than those in the US and 100% more than in Europe, these additional costs will mean companies looking again at their UK future. Whilst the Government is right to think before pressing the retaliation button and we welcome the commitment to consult on the implications of possible retaliatory measures, talks between our respective administrations must proceed as quickly as possible. Minimising the impact of these additional costs and securing a wider trade agreement that supports UK manufacturing businesses and jobs is an urgent priority.
Steve Elliott, Chief Executive of the Chemical Industries Association
Notes
- Chemicals and Pharmaceuticals are a critical UK export, chems over £30 Billion in 2024 and Pharma £25 billion. Despite recent declines, the sector is the 2nd largest UK goods export in terms of value.
- UK Chems and Pharma exports to US are £11bn (Chems £5b, Pharma £6b) or 40% of non-EU trade (total non-EU directed trade is £26 billion) – 2024 stats
- Nearly a quarter (23.6%) of all the UK’s exports of chemicals went to the US in 2023, with the figure even higher for organic chemicals (27.8%), and medicinal and pharmaceutical products (33.9%)
- The breadth of US companies operating in the UK is significant. Many of those companies trade directly with parent plants in the US and would be subject to any new tariff which will impact on their competitiveness.
- During UK-US FTA negs under the first Trump presidency CIA and the American Chemistry Council agreed that 100% tariff liberalisation on chemicals would deliver an immediate £200 million annual boost to the manufacturing economies of the US and the UK. Applying new tariffs does the opposite. It reduces the amount available to companies to invest in R&D and new capacity – it reduces the potential for growth. Whatever efforts are being made now between both our countries for an economic agreement. those talks should be given every encouragement to succeed. Even then, it is not helpful for a global industry like ours for there to be tariffs between nations.
- The US approach to tariffs risks destabilising the world order on trade. Both countries have long been strong advocates of the value of free and fair trade. That unity has helped push emerging economies to introduce lower tariffs on the building blocks (chemicals) for the manufacturing sector. A divergence by the US on tariffs will encourage others to review their own tariff schedules and increase taxes.
What do we export to the US?
- Organic basic chemicals - including ethylene, propane, and butane. These organic chemicals are manufactured from refined petroleum and are used in a wide variety of consumer goods around the world. Ethylene used to produce polymers, Polyethylene (Plastics) – used to make food packaging, bottles, bags, and other plastics-based goods. Sadly the UK no longer produces ethylene oxide in any volume. Propane is a motor fuel, Butane is used as a propellant in pharmaceutical products, such as inhalers and topical sprays. And Industrial Chemicals that cover a broad range of chemicals used in inks, plastics, adhesives, paints, glues, solvents, cosmetics, soaps and many other products.
- Plastics and plastic products – Plastics include plastic products such as packaging, building and construction materials and electric and electronic component. It also includes raw materials polymers and waste plastic for recycling.
