How investing in U.S. chemical manufacturers can advance the Trump administration's economic agenda

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American Chemistry Council

P

resident Trump is promising to deliver a new golden age for the U.S. economy.

“Economic confidence is soaring like we haven’t seen in many, many decades,” he said recently at the World Economic Forum in Davos. “Under the Trump administration, there will be no better place on Earth to create jobs, build factories or grow a company.”

Central to achieving that success and a true boon for the American economy lies in the strength of the American chemistry and plastics sector — which serves as a building block for so many other sectors of the U.S. economy. Domestic chemical manufacturers are critical to innovation, health care, national security and energy independence. The industry also supports 25 percent of the nation's GDP and over 4 million jobs.

For instance, take electronics: Chemistry makes it possible for much of the industry and the jobs and lives that depend on them to function and thrive. From mobile phones and computers to medical tools, defense equipment and gaming systems — thank a chemical engineer. Chemistry is also a critical part of the semiconductor manufacturing supply chain: More than 500 different chemicals are typically needed to manufacture a single semiconductor chip.

"Across sectors, we're at the beginning and end of the manufacturing supply chain and nearly everywhere in between," said Chris Jahn, president and CEO of the American Chemistry Council, or ACC, the leading association representing the $633-billion U.S. chemicals and plastics industry.

While the chemical industry might lack the buzzy allure of other sectors like artificial intelligence or outer space, it's actually a key driver of these industries and just as important to the future. And yet, the chemistry industry has arrived at a critical crossroads. The demand for chemicals in the U.S. is projected to grow by 15 percent in the coming years. But due, in part, to a complex regulatory landscape, the growth of U.S. chemical manufacturing capacity is expected to lag, growing by just about 10 percent. The industry is also grappling with volatile raw material prices, supply chain disruptions, fluctuating economic conditions and the necessity to adapt to evolving customer demands.

Addressing these challenges requires innovation, investments, collaboration, advocacy and proactive policy. Jahn believes that the new administration’s efforts focusing on pro-growth policies and cutting regulatory red tape creates a unique opportunity to enhance America's manufacturing capacity which will also advance technological innovation and economic resilience in the U.S. This would allow America to regain its competitive edge on the global stage and reduce reliance on foreign producers.

Jahn seems well-suited for the political conversations ahead, given his extensive experience on Capitol Hill, including time as chief of staff to Sen. Craig Thomas (R-Wyo), and his twenty-plus years running a Washington, D.C. trade association with a focus on the U.S. chemical industry. POLITICO Focus spoke with Jahn about why supporting chemistry is critical for the U.S. economy, and how the industry plans to work with policymakers to advance an ambitious economic agenda.

American success relies on American chemistry. American energy relies on American chemistry; American health care relies on American chemistry; America’s supply chain relies on American chemistry; and the list goes on. There's a direct line between the success of our sector and the success of the American manufacturing economy.

Chris Jahn

President and CEO of the American Chemistry Council

question

Your organization represents 190 companies that support more than 4 million jobs. What are the biggest concerns you've been hearing about from members?

answer

The biggest concern is that the manufacturing economy is in a recession. It's contracted for the last two years and now has stalled because of the enormous regulatory burden that the industry faces. Chemical manufacturing is the most heavily regulated sub-sector of manufacturing, and restrictions have doubled in the past 20 years. An ACC survey found that most respondents said that regulations have negatively impacted them, and many of our members decided to introduce new chemicals outside of the U.S. due to domestic regulatory uncertainty. That should be a concern to all Americans. If you care about manufacturing, or energy independence, or health care, you should care about chemical manufacturing. We are integral to all those sectors.

We're not against regulation. Our industry should be regulated, but with a sensible, science-based approach that encourages manufacturing here in the U.S. while protecting human health and the environment. We can do all of these things.

question

You mentioned that burdensome regulations are holding chemical manufacturers back. What's an example of that?

answer

Take the Toxic Substances Control Act (TSCA), the primary law that regulates chemical manufacturing. It helps ensure that the thousands of products our members make — and Americans rely on — are manufactured safely, securely and in an environmentally appropriate way. But the review process is broken. Under TSCA, the EPA has 90 days to review and decide on a new chemical before the manufacturer can commence production. However, the EPA is late on those reviews almost 90 percent of the time , and 66 percent of the chemicals that are submitted are more than a year in the queue. We're trying to drive better environmental performance, and we're trying to drive innovation at the same time. Government regulation is literally blocking that innovation from happening. According to a survey of our members, many said they are introducing new products outside the U.S. That's the connection from regulatory uncertainty that directly impacts the American manufacturing sector and drives jobs and innovation overseas. We want to surgically fix that review process, not change it dramatically.

Chemistry is Critical to National Priorities

Click to explore how chemistry helps power so much of the American economy — from innovation in America’s hospitals to the future of energy.

question

There is new leadership in Washington, and every new administration presents an opportunity for change. President Trump is particularly focused on boosting U.S. production and jobs. Where does the chemical sector fit in at this moment?

answer

As I said, we want a sensible, science-based approach to regulation. It's our hope to work with the administration and Congress to help make that happen. Trade plays a key role in our competitiveness and has emerged as a major priority in the president's first 100 days. Our goal is to ensure that the administration fully understands that we need to win globally on trade. The U.S. chemical industry has a trade surplus of more than $30 billion on an annual basis, with exports supporting nearly 200,000 jobs. As the second-largest export manufacturing sector, we'd love to expand our reach even further, opening up trade with the UK, the EU, Brazil and countries in Asia to create a global trade network that helps us win and compete against countries like China.

question

What does success look like for ACC and the chemical industry four years from now? What’s needed for the U.S. chemical sector to regain its competitive edge?

answer

China's chemical manufacturing industry is nearly four times our size and growing. So, with the right policies, we're closing that gap and making more things here, not just for our industry but for the entire manufacturing sector. We also want to onshore critical supply chains so that Americans can be sure — whether it's another pandemic or any other shock to the system — that they can feel comfortable that we have what we need, and that we can supply it for ourselves. We need a risk-based, pro-growth-based approach to policy that allows our members to make investments here for the long term. You're talking about 30-, 40-, 50-year investments and multi-billions of dollars for tomorrow’s chemical plants. We need to have regulatory certainty so that our members have confidence to make those long-term investments here in the U.S.

TRADE PLAYS A KEY ROLE IN U.S. COMPETITIVENESS

The U.S. chemical industry is one of the world's leading suppliers.

Nearly

$60 BILLION

IN EXPORTS

go to Mexico and Canada, the two largest markets for U.S. exports.

In the U.S.,

$164 BILLION

IN CHEMICAL EXPORTS

account for 10% of all exported U.S. goods.

30% of

544,000

AMERICANS

employed in chemistry are in export-dependent jobs.

Source: ACC

question

You noted that the chemical industry is at the beginning and end of the supply chain, so these issues go far beyond chemical manufacturing. What ripples will there be in the larger economy if more regulatory certainty doesn’t happen?

answer

The chemical manufacturing industry is involved in nearly everything that's manufactured: your clothes, phone, car and the products we all rely on every day. But we're also necessary to energy, national security, health care and innovation. You typically need more than 500 specific chemistries to make one computer chip. We hope the new Congress and the new administration support policies enabling the manufacturing of semiconductors here in the U.S. A more appropriately run regulatory system would help enable a resilient supply chain where we could rely on American manufacturing rather than sending things abroad, predominantly to China. Ultimately, it's all about creating jobs and economic growth here in the U.S. American success relies on American chemistry. American energy relies on American chemistry, American health care relies on American chemistry, America’s supply chain relies on American chemistry — and the list goes on. There's a direct line between the success of our sector and the success of the American manufacturing economy.

American Success Relies on American Chemistry

Here’s what the U.S. needs to do to achieve the administration’s goals and empower the industry.

Drive Predictable, Transparent, Fact-Based Policies

Advocate against unnecessary bans and restrictive rules that would limit availability of key chemistries.

Foster Innovation in the U.S., Not Elsewhere

Avoid regulatory overreach and onerous restrictions that don’t reflect real-world circumstances and intended uses of new products.

Protect The Environment

Protect and preserve a healthier environment through championing innovative, science-based policy solutions across all levels of government.

Explore all five priorities here.

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question

How does ACC balance the need for regulatory reform with environmental and public health concerns?

answer

I’ll stress again: We're not saying we shouldn't be regulated. It's appropriate to have regulations on these products that we make. However, the approach that has been taken is misguided and pushes that production overseas. These chemicals will still be made, and the finished goods will still be made, but they'll be made overseas, often in countries with laxer environmental health and safety standards than in the U.S.

In addition, our members are proactive and required to comply with our program called Responsible Care®. It's a condition of membership, and it's third-party audited. Responsible Care evaluates their environmental health, safety and security performance. We collect data on that performance, aggregate it and publicly disclose it. We’ve reduced the greenhouse gas intensity of all our operations by double digits in the last eight years. We've reduced our air emissions. We’re safer and cleaner than ever before. Our members include the scientists and engineers who live in the same communities where they work, and they have a vested interest in ensuring that we're good stewards and good partners in those communities.

question

Other sectors focused on innovation are getting a lot of Congress’s attention these days, like AI. Do you need to shout a little louder than these other industries just to be heard? How do you work on a continual and long-term basis to achieve your goals?

answer

AI has the opportunity to change the world, no question. But you won't be able to change the world without the chemical manufacturing sector. To power those data centers, you need the chemistry to generate the energy that creates all the electricity they need. As I said earlier, you need chemical manufacturing to make the chips that power AI and the devices that use AI. We unlock all of that innovation, which is critical for Congress to understand.

When it comes to the second question, we emphasize the idea of regulatory certainty. Our members are making long-term investments and want to see successful outcomes. So, we need to build champions on both sides of the aisle. It's a pro-growth, pro-America, make-it-here approach. That's important. Science should not be a partisan issue. If we do that, I'm confident that no matter what party is in charge, we can ensure that policy outcomes encourage innovation to happen in the U.S. I think policymakers understand that this is a priority. They must.

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