Sarnia chemical industry facing uncertainty as looming tariffs pose 'dire' threat to sector

The president and CEO of the Chemistry Industry Association of Canada says potential U.S. tariffs on Canada's chemical industry will have a "dire" effect on the sector — which has a significant presence in Sarnia.

Some companies on the ground, meanwhile, say it's business as usual, and they're doing what they can to prepare. 

Chemical and plastics manufacturing in North America is highly integrated, said the chemistry association's Greg Moffatt.

"Companies would have facilities in Canada, the U.S. and Mexico, and they would be producing one specific commodity in each of their locations, and they would be bringing them together for inputs for, you know, another product," he said.

"And as you've seen in the automotive sector, you know, parts can move back and forth across the borders many times before they wind up in a finished product that might be used by an industrial customer or retail, right?"

It would not be easy for companies on either side of the border to reorient their businesses to avoid tariffs, he added.

U.S. President Donald Trump imposed 10 per cent tariffs on Canadian energy imports and 25 per cent tariffs on all other Canadian imports on March 4, only to pause them two days later on goods that were compliant with the Canada-U.S.-Mexico free trade agreement (CUSMA). 

Those tariffs are now set to go into effect on April 2. 

And while there's been much focus on the impact on the Canadian auto industry, the chemical industry is similarly exposed, Moffatt said.

Canada exported 77 per cent of its chemicals and 94 per cent of its plastics and resins to the U.S. in 2023, according to data from the association.

Ontario alone exported around $3 billion in chemistry products and $9 billion in plastics and resins to the U.S. that year.

Those products include polyethylene, butyl rubber, isopropyl alcohol, sulphuric acid, and plastic products used in automobile manufacturing, food processing, packaging and building materials. 

About $4.7 billion of the industrial chemicals and resins exported to the U.S. came from Sarnia, said Dave Cherniak, the Chemistry Industry Association of Canada's policy manager for business and transportation.