Petrochemical executives and analysts expressed optimism the Trump administration won’t launch any broad trade wars and will instead compromise on business-friendly tax breaks and laxer regulations instead.
Speaking Tuesday at the World Petrochemical Conference by IHS Markit, Houston-based LyondellBasell Industries CEO Bob Patel said he expects business-oriented practicality to win out over controversial border adjustment taxes or massive new tariffs.
“My sense is that people are going to be pragmatic at the end of the day and recognize that global trade is important for the American economy,” Patel said, noting that he met last week with new Commerce Secretary Wilbur Ross and some congressional leaders.
IHS Markit Chief Economist Nariman Behravesh said any border adjustment tax that only taxes imports more — by about 20 percent — without punishing exports is unpopular with most Senate Republicans and is unlikely to go anywhere.
Such protectionist policies only slow growth, punish U.S. consumers and importers, and lead to global trade wars, Behravesh said. Instead, he believes corporate tax cuts combined with updated, not redrawn, trade deals with Mexico and others will win out.
At least 75 percent of lost American manufacturing jobs are the result of increased automation technology, not unfair trade deals, he said.
“We’re going after the wrong problem here,” Behravesh said.
IHS Markit Senior Vice President Dave Witte agreed a border adjustment tax is unlikely, but he added a caveat.
“There’s a low probability of being enacted, but I heard that about Brexit and President Trump as well,” Witte said.
Even if the U.S. does approve such policies and suffer as a result, life will go on in the rest of the world, said Mutlaq Al-Morished, CEO of Saudi Arabia-based Tasnee petrochemical company. Saudi Arabia would just end up trading more with growing Asian nations instead, he said.
“The U.S. was the champion of it (free trade), and now the U.S. is almost 180 degrees,” he said.