Image: Ink World
There has been a lot of concerns over the increasing tariffs that are being levied against more and more products. These include key chemicals, including raw materials that are used for inks. The higher raw material costs are already drawing resulting price increases from ink manufacturers. The recently imposed tariffs are 10% effective immediately and will increase to 25% in January.
Trade wars hurt pretty much everyone in the affected supply chain, from manufacturers to retailers and ultimately consumers. With decreased buying power, consumers will either have to cut purchasing or take on more debt. Costs will increase for many goods.
These tariffs have drawn the concern of the chemical industry. On Sept. 24, 2018, Ed Brzytwa, American Chemistry Council (ACC) director of international trade, discussed the implementation of U.S. List 3 tariffs and subsequent retaliation by China against U.S. exports:
“With the U.S. and China imposing another round of tariffs on an increasing number of products, the cost of doing business in the United States is rising,” Brzytwa said. “U.S. manufacturers today face a steep climb to retain our position as one of the world’s leading, low-cost producers of chemicals. A total of 1,517 chemicals and plastics imports from China, valued at $15.4 billion, have now been targeted across all three U.S. lists. The tariffs will cut off U.S. manufacturers from international supply chains and from importing inputs that help keep them competitive in the global marketplace. At the same time, retaliatory tariffs by China have hit more than 1,000 U.S. chemicals and plastics exports, worth an estimated $10.8 billion, erecting a huge barrier to China’s growing markets.
“The tariffs – in effect a tax – put U.S. chemical manufacturers at a disadvantage, but we aren’t the only ones that will suffer the impact. Since chemistry touches 96 percent of all manufactured goods, taxes on our industry will ultimately raise the prices of popular consumer products – everything from cars and trucks to electronics.”
Brzytwa said that the chemical industry recently surpassed $200 billion in announced new chemical investment projects in the United States. “Around half of that investment is still in the planning or development stages and therefore vulnerable to delay or abandonment as a result of the new tariffs imposed on our industry,” he said. “Nearly all of that investment is focused on serving the global market. American businesses, which may have to consider shifting their production overseas to avoid the tariffs, or face the possibility of having to close up shop entirely, deserve the opportunity to be heard.” Brzytwa added that the ACC is calling on “the U.S. and China to resume negotiations toward an agreement that will eliminate the need for these costly tariffs.”
Industries that rely on chemicals are feeling the impact, and the ink industry is no exception. Flint Group announced price increases on offset inks and coatings in late September 2018. Michael Podd, chief procurement officer of Flint Group’s CPS Inks division, cited tariffs as one of the reasons for the increase.
“These tariffs affect a number of key materials used in printing inks,” said Podd. “Any increase of U.S. tariffs against China would significantly impact the costs of raw materials purchased by U.S. companies. This could have severe consequences for the U.S. printing industry that, in some segments, is already fragile. We are optimistic, however, about the government’s decision to end the increased tariffs on Canadian uncoated groundwood paper. It’s a move in the right direction.”
“Increasing tariffs have the potential to cause issues,” Ken Klug, Wikoff Color’s director of purchasing, pointed out. “The third list of proposed tariffs released will have the most impact on the raw materials used for our industry.”
“A 25% tariff from China may reduce the imports of products that are produced in other parts of the world,” added Jyoti Gidvani, Toyo Ink America’s purchasing manager.
“The recent Trump administration tariff initiatives will significantly impact the chemical industry and the raw materials that support printing inks if implemented at the reported levels,” said Jeffrey Shaw, chief supply chain, quality and business improvement officer for Sun Chemical. “Not only will the direct tariff impact be significant, but they will impact the secondary and tertiary levels throughout almost every category’s value chain.”
On Sept. 4, Sun Chemical announced its own price increases for all of its inks, coatings and consumables, citing raw material supply disruptions, higher transportation costs, as well as governmental initiatives, including tariffs and environmental regulations.
“The increasing raw material costs are unprecedented and as a result we must continue to review our ink, coating and consumable prices,” said Chris Parrilli, president of North American Inks, Sun Chemical, in announcing the higher prices.
It is uncertain yet how the tariffs will play out, but ink industry executives will be keeping a close eye on any developments.