The build-up and hype around the election of a U.S. president are ultimately a bit anticlimactic given yawning gap between the confetti and balloons of election night and the hand-on-the-Bible of an inauguration.
The 73 days between Donald Trump’s stunning Nov. 8 victory and his assumption of the presidency on Jan. 20 feels even longer than its two months and 12 days, mostly because of the amount of uncertainty in the country.
That November to January gap is usually filled with speculation about how the new administration, assuming there’s no incumbent, will run the country. As much as any speculation is informed, the guesswork here draws on what a candidate campaigned on and the early makeup of his or her cabinet.
Taken at his word, President-elect Trump, among other things, has issued a consistently hard line on free-trade agreements, promising renegotiation for existing ones, like NAFTA, and abandonment of new ones, like the Trans Pacific Partnership. In the case of NAFTA, the potential impact on plastics can’t be understated.
According to SPI: The Plastics Industry Trade Association’s December 2015 Global Trends Report, the U.S.’s largest trade surpluses in resin, plastic products, plastics machinery and molds were with Mexico. Per the report:
In 2014, as in previous years, the U.S. plastics industry had its largest surplus with Mexico. The surplus with Mexico is attributable to the North American Free Trade Agreement (NAFTA). U.S. plastics companies are taking advantage of duty-free access into Mexico’s market given the country’s close proximity.
In 2014, the U.S. plastics industry exported a total of $15.8 billion in plastics-related goods to Mexico, with a total trade surplus of $11.1 billion. Again, for each of the major categories, Mexico was the No. 1 market in terms of surplus.
Resin: $6.7 billion surplus with Mexico.
Plastic products: $4.0 billion surplus with Mexico.
Moldmaking: $283 million surplus with Mexico.
Machinery: $215 million surplus with Mexico.
As far as plastics goods and equipment are concerned, NAFTA has been beneficial to U.S. companies if you judge the “winner” in a trade deal by the direction trade predominantly flows. An argument against the deal could be made on behalf of plastics workers whose jobs have been displaced by NAFTA, but on the whole, employment in the plastics industry has been on the rise over the last two decades, according to SPI.
On Nov. 23, the German Plastics and Rubber Machinery Assn. (VDMA) released its latest report noting that in 2015, the U.S. had overtaken China to regain first place among the most important markets for German machinery.
U.S. imports reached a record 719 million euro in 2015—almost three times the level of 2009’s market nadir. VDMA also used the release to call out strong growth in Mexico and tie it to America’s resurgence.
In 2015, VDMA reported that exports of German plastics and rubber machinery to our southerly neighbor were nearly 50% higher than 2014, pushing Mexico to fourth place among Germany’s most important markets.
The VDMA went further, editorializing as much as is possible in such a report, noting:
The Mexican market’s strong rate of growth may also be explained by the North American Free Trade Agreement (NAFTA), which has dismantled trade barriers in the region.
It went further yet in a paragraph under the head, “U.S. and Mexico will continue to be important markets in the future”, leaving no doubt where it stands on NAFTA.
Owing to the high level of demand for plastics, plastic packaging in particular, German plastics and rubber machinery manufacturers expect sales to the U.S. and Mexico to remain strong. Existing free trade agreements are of fundamental importance for this; any form of protectionism on the other hand will be damaging to the business activities of all concerned.— Thorsten Kühmann, VDMA Managing Director
I recently completed a swing through Chicago and Milwaukee, visiting six companies over two days. Every single company on the trip had ties to Mexico, most of those with physical operations there. Every company spoke about the strength of their current business, but they were also unanimous in their uncertainty about the future.
With one month and 18 days until Donald Trump stands across from Chief Justice John Roberts, lots of people in plastics are wondering what differences, if any, they’ll see in regards to trade policy between candidate Trump and President Trump.