U.S. must break its dependence on Chinese chemicals

OPINION:

America is at a crossroads in terms of growing and competing on the world stage. In a hotly contested election season, there is one area of clear bipartisan agreement: Our country’s future depends on making more things here at home.

The White House and Congress have prioritized producing more in America — from semiconductors to energy — and rightly so. Accomplishing all that means producing more chemistry here at home, not less.

The global demand for chemicals will increase by 30% in the next decade. China is on track to expand its chemical manufacturing capacity by more than one-third in that time. The United States? Less than 10%. Why?

A big reason is that the ballooning number of regulations on chemical manufacturing in the U.S. has increased operating and compliance costs, discouraging job creation and investment. In fact, the number of new restrictions on chemical producers has doubled over the last two decades. The chemical industry has seen a ninefold increase in the number of economically significant regulations from the Biden administration. These regulations and others in the queue will raise annual compliance costs for the industry by up to 50%.

These regulations have been adopted with little regard for their repercussions on the broader economy and U.S. leadership. For example, in April, the Environmental Protection Agency issued a new rule to cut air pollution by lowering the “safe” level of exposure for a chemical used to produce semiconductors and electric vehicles. But it defined that threshold as 23,000 times as low as naturally occurring levels in the human body.

That doesn’t make sense. This misguided rule will massively raise compliance costs for the companies producing these much-needed semiconductor chips, which require as many as 500 specialized chemicals to manufacture.

With government restrictions like these, how can America triple its semiconductor manufacturing capacity in the next decade? It makes no sense for our government to spend hundreds of billions of dollars spurring domestic semiconductor manufacturing while issuing questionable policies that make it much harder to produce them.

In a recent survey, two-thirds of American chemical companies reported negative impacts from regulations. Nearly 70% chose to introduce new chemicals outside the U.S. because of regulatory uncertainty. That is not good news for the country’s manufacturing base and should be a wake-up call for the next administration.

If you want to know how this story plays out, you need only look across the Atlantic. Excessive regulations and stifling energy policies gutted Europe’s manufacturing sectors, halving its share of global chemical production in just two decades. Today, Europe depends on foreign nations for the chemicals needed to make semiconductor chips, electric batteries and other advanced technologies vital to its economic growth and national security.

To keep America out front, the next president must learn from past regulatory mistakes and adopt policies that expand manufacturing in the United States, including chemical production — not send it overseas.

• Chris Jahn is president and CEO of the American Chemistry Council.