State’s petrochem industry at risk of trade wars hit, too

If trade tariffs continue, a petrochemical industry representative warns it could jeopardize jobs, goods and billions of dollars in investment for Louisiana.

Petrochem- heavy St. Charles Parish with major companies like Dow, Monsanto and Valero could feel the hit as well.

“We’re going to see an impact if the tariffs stay in place three to six months,” said Greg Bowser, president of the Louisiana Chemical Association. “We’ll see a huge impact.”

Some $60 billion of potential petrochem expansion is earmarked for Louisiana, as well as the Gulf Coast, Bowser said. The state has already gotten $30 billion in investments, such as the Formosa Petrochemical Corp.’s $9.4 billion chemical manufacturing complex down river from the Sunshine Bridge in St. James Parish.

Bowser said growing trade wars with China could further jeopardize this investment with this country being a major investor as well as trade partner.

China is a critical trade partner, and Trump plans on increasing tariffs or taxes on imports.

“A tariff is nothing more than a tax on goods and they’re talking about 10 to 25 percent tariffs,” Bowser said. “That’s huge.”

This has been the impact on steel and aluminum, and China is retaliating.

Hoping to ease worries about it escalating, Bowser said they will seek exemptions from the federal government for petrochem, which has been allowed on other goods.

“We hope this trade war doesn’t stay in place very long,” he said. “We hope there’s a solution to this.”

Ranking among its major exports, Louisiana petrochem exported $9.7 billion last year, Bowser said. The state has 65 chemical companies and ranks among the nation’s top three chemical exporters.

“If you put an extra tax on that, they retaliate,” he said. “Every major chemical manufacturer has a possibility of being impacted by this. When you start talking about a tariff on their goods, their costs go up and they usually have to lay people off or find other markets.”

At the Port of South Louisiana, Director Paul Aucoin said he doesn’t know what the impact will be on petrochem, but he does know it’s one of the port’s two biggest commodities. The other is grain, which Aucoin said is expected to survive tariffs because China can’t get enough of it from competitors.

“Petrochemical is our biggest worry right now,” he said.

It makes up 20 percent (60.8 million tons) of the port’s cargo along with crude oil at 28 percent (86 million tons) and grain at 35 percent (101.8 million tons), according to Aucoin.

The port director also pointed to potential impact of trade wars on investment.

Aucoin said $28 billion in new investment has been made in the area, including St. Charles Parish’s Monsanto’s $975 million expansion, Entergy’s Little Gypsy plant, $869 million, Bungee’s $140 million expansion, Momentive Speciality Chemicals’ $38 million investment and Norway’s Kongsberg Maritime’s $15 million investment.

“We’ll find a way to deal with it,” he said. “We have no choice. We’ll make do.”


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