ACC Report Highlights NAFTA’s Importance to Chemical Sector

MARCH 8, 2018

The American Chemistry Council (ACC) recently published a report that underscores the importance of the North American Free Trade Agreement (NAFTA) to the chemical industry. In its analysis, ACC states that chemical exports from the U.S. to Mexico and Canada are expected to rise to nearly $59 billion in 2025, compared to the current level of $44 billion; however, ACC projects that number would drop 52 percent if the U.S. withdrew from NAFTA. Additionally, ACC estimated that withdrawal could cost nearly 21,000 U.S. jobs and upwards of $29 billion in overall financial losses to the chemical industry.

“NAFTA has given chemical producers confidence to invest by providing certainty that increased volumes of U.S. chemical . . . will be tariff-free for our NAFTA partners,” said Emily Sanchez, director of economics and data analytics at ACC. “With a long capital cycle, certainty and confidence in future trade relationships, especially with the U.S.’s two largest trading partners under NAFTA, are essential to justify future investment.”

As noted in the graph below from the report, the U.S. manufacturing supply chain is heavily reliant upon the tariff-free flow of goods across the border.

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U.S. chemical companies saved approximately $700 million in tariffs from exports, as well as nearly $800 million from imports under NAFTA, ACC said.

Overall, ACC notes that NAFTA may be improved upon, but it is imperative that goods – including chemicals – be able to move through Canada, Mexico, and the U.S. freely without tariffs being levied upon them.