US-China trade war is hurting South Carolina manufacturing industry
Nine jobs in one of South Carolina’s poorest counties this week became the latest casualty in a ongoing trade war with China, fueling concerns that stalled negotiations will hamper U.S. economic growth and job gains.
Stocks again tumbled, with the Dow Jones Industrial Average dropping more than 600 points Friday, after China announced new retaliatory tariffs on U.S. goods. And President Donald Trump tweeted he is ordering U.S. companies “to immediately start looking for an alternative to China.”
Archroma U.S., Inc., announced the layoffs this week in an interview with The State ahead of a S.C. Chamber of Commerce panel discussion in Columbia Thursday with members of the state’s congressional delegation about issues facing Palmetto State businesses.
Russ Gibson, head of operations for Archroma’s plant in Martin, S.C., said the layoffs are a direct result of lost market share to foreign competitors and decreased production as costs for materials sourced from China and elsewhere rise.
“For us, (the trade war is) hurting the U.S. manufacturing industry,” Gibson told The State. “This is an unintended consequence of the tariffs. It’s causing people their livelihood in the last 24 hours, and will continue if we do not see immediate action.”
At the panel Thursday evening, S.C. congressman said they continue to support Trump’s trade war as a means of pressing China on unfair trade practices, all while they lobby the White House for exemptions on behalf of S.C. businesses.
U.S. Rep. Ralph Norman, R-Rock Hill, called the layoffs “unfortunate,” but pointed to job growth and record low unemployment in the state, arguing there are plenty of other job opportunities in the state.
“I will go to bat for them for an exclusion, particularly if it can’t be made in this country and they don’t have access,” Norman said of South Carolina businesses. “And the president so far has done this. He’s made the exclusions.”
Gibson said the lost jobs paid an average salary of $50,000 to $60,000 — with retirement and other benefits — in a county where the median annual income was $23,331 in 2017.
That’s less than half the median annual income of $61,372 across the entire United States in 2017, according to the latest U.S. census data.
In a follow up statement shared with the state’s congressional delegation, the Charlotte-based company said the layoffs affected approximately 15% of its workforce at its Martin, S.C., plant.
Gibson said the company supports the administration’s efforts to end the trade imbalance with China, but “this is impacting rural communities and the livelihood” of rural and blue-collar workers.
The company produces specialty chemicals, dyes and optical brightening agents — additives that make paper and textiles whiter and brighter.
Archroma is one of three manufacturers in the U.S. — all located in South Carolina — that supply the additive to the broader U.S. paper industry.
A key chemical used in making the additive is not produced in the United States, forcing S.C. companies to import it from China, the only country that exports more of the acid than it receives.
In September, the White House slapped a 10% tariff on the chemical that increased to 25% in May.
All told, the Trump administration has steadily raised tariffs on about $250 billion of Chinese goods, and it plans to slap a 10% tariff on the remaining $300 billion worth of Chinese imports not already being taxed, including many consumer products such as cellphones, laptops and shoes.
Archroma has purchased the chemical from India. However, India doesn’t sell enough of the chemical to meet demand from the United States and other countries. That forces S.C. manufacturers to buy from China, Gibson told The State.
Optical brightening agents account for 60% of the total production at Archroma’s Martin, S.C., plant and covers 40% of the cost to operate the plant, Gibson said.
The company, which was spending about $200,000 a month on tariffs for all materials, now spends nearly $1 million a month.
As a result, the company said it has been forced to raise the price of its products sold to U.S. paper mills by up to roughly 18% — hikes that ultimately make copy paper more expensive for customers.
At the same time, foreign producers from Taiwan, Indonesia and India, who are not subject to the tariff, continue to purchase the Chinese chemical, allowing them to export more to the United States and undercut prices from American manufacturers.
Archroma has requested an exclusion from the tariffs.
Republican S.C. Gov. Henry McMaster, an ally of President Donald Trump, along with the entire South Carolina U.S. House delegation sent letters in support on Archroma’s behalf to U.S. Trade Representative Robert Lighthizer.
“I am concerned that this shift away from American manufactured OBA will cause U.S. ... producers to shut their doors resulting in the loss of valuable well-paying jobs in some of the poorest counties in our state and nation,” McMaster wrote early this month.
South Carolina Republican U.S. Reps. Joe Wilson of Springdale, William Timmons of Greenville and Norman of Rock Hill, told S.C. business leaders Thursday they stand by the Trump Administration’s efforts to press China over unfair trade practices, including forced transfer of technology and intellectual property, that has burdened and restricted U.S. business overseas.
Last fall, TV assembly company Element Electronics received a critical exemption from tariffs levied by the Trump administration, eliminating the need for the company to lay off more than 100 workers at its Fairfield County plant. The administration also granted an exclusion on washing machines on behalf of a new $380 million Samsung plant in Newberry.
Archroma’s Gibson stressed the exclusion process needs to be expedited, adding it could cost the company up to 100 jobs at its S.C. factory.
“The Martin plant has a strong likelihood that it will not exist in the next 18 months, if this process continues, after 40 years of working in the community and being one of the main industries in Allendale County.”
S.C. Chamber President & CEO Ted Pitts said South Carolina businesses are looking for a more targeted approach from the White House, “and not implement tariffs, which are ultimately taxes on consumers, in a more broad fashion that hurts Americans.”