Coronavirus and The U.S. Plastics Industry Supply Chain

By Perc Pineda, PhD

Based on research published by the Federal Reserve Bank of St. Louis in July 2018, on average 22% of total expenditure on intermediates used in U.S. manufacturing is purchased from abroad. As far as U.S. plastics and rubber products manufacturing is concerned, it is estimated that ~65% are intermediate inputs, of which ~17% are imported. Some of the intermediate inputs for the U.S. plastics industry originate from China.

Last year, the U.S. general imports (including all goods that physically arrive into a U.S. port or customs district for processing) of plastics and articles thereof broadly classified under HTS 39 was $57.7 billion. General imports from China in 2019 of products under HTS 39 was $17.9 billion—31.0% of U.S. imports or $1.5 billion a month. Undoubtedly, China plays a role in the U.S. plastics industry supply chain.

Last year, U.S. total exports for plastics and products thereof (HTS 39) to China was $5.0 billion. China is the third-largest U.S. plastics export market after Mexico and Canada. The coronavirus outbreak is already expected by some economists to slow China’s output in the first quarter by 0.5 to 1.0 percentage points. As China’s economic growth weakens, it will negatively affect U.S. exports to China.

While we cannot confirm today that the coronavirus has already impacted the U.S. plastics industry supply chain, it is reasonable to expect that if the coronavirus crisis in China continues and escalates, it will negatively impact the U.S. plastics industry. For business continuity reasons, U.S. plastics companies need to look at their current supply chain involving China and—as a precautionary measure—examine alternative supply sources.