Since Donald Trump’s second inauguration, his administration has been rapidly rolling out executive orders that will significantly affect the U.S. chemical distribution industry, energy policies, and international trade. A key focus is trade and tariffs, particularly with China, Canada, and Mexico. Trump’s “America First” trade policy aims to address U.S. trade deficits and potentially impose tariffs, including a possible 25% tariff on imports from Canada and Mexico starting February 1. This could lead to increased costs for industries reliant on cross-border trade, such as independent lubricant manufacturers. These tariffs are designed to correct trade imbalances and reduce U.S. dependency on foreign supply chains, especially for critical minerals and semiconductors. However, the immediate consequence could be rising production costs for U.S. manufacturers, who may face higher prices on raw materials and finished goods.
In addition, the Trump administration is revisiting the United States-Mexico-Canada Agreement (USMCA) and other trade deals to ensure that they favor American manufacturers and workers. The U.S. Trade Representative has been tasked with reviewing trade terms, with a specific eye on how these agreements impact U.S. businesses. The ongoing renegotiations could involve modifying tariffs, especially against China, to address national security risks and to protect domestic industries like manufacturing and technology. This protectionist approach could also lead to further tariff increases, which will likely raise costs for businesses and consumers alike.
Furthermore, Trump’s administration is exploring the feasibility of a new agency, the External Revenue Service, to collect tariffs, duties, and other trade-related revenues, signaling a shift toward more aggressive tariff enforcement. The emphasis on tariffs, particularly against China, aligns with a broader strategy to achieve reciprocal trade relationships. These measures are likely to increase the cost of doing business, particularly in industries with significant global supply chains, like the lubricant industry. In the short term, these tariffs will likely drive-up costs for manufacturers, forcing them to either absorb the increased costs or pass them on to consumers.
Trump has also instructed the Secretary of Commerce to review antidumping and countervailing duties (AD/CVD) regulations, which could lead to stricter enforcement of tariffs designed to protect U.S. manufacturers from unfair foreign competition. This could further complicate the global trade landscape for U.S. businesses, especially those reliant on international markets for sourcing materials or selling products abroad.
Overall, the combination of tariffs, deregulation, and a shift in trade policy promises a more protectionist and costlier environment for U.S. manufacturers, including those in the lubricant industry. With tariffs pushing up costs, the industry may face higher production expenses and increased prices for both raw materials and finished goods, making it more expensive to produce and distribute lubricants in the U.S.