Trade War Tremors: How US-China tariffs reshape the petrochemical landscape

The recent tariff impositions by both the US and China are reshaping the global petrochemical landscape. We expect these tariffs to lead to higher prices for affected commodities in China, impacting domestic feedstock demand and petrochemical production. Tariffs are likely to result in less-efficient supply chains and additional delays in capital expenditure decisions. This could result in higher production costs in China and reduced competitiveness for US petrochemical producers into that market. On 7 April, Donald Trump threatened to add an additional 50% to tariffs on Chinese goods if China does not withdraw the 34% tariffs on all US imports it announced on 4 April. China hasn’t responded by the writing date of 8 April. We believe that there will be tariff uncertainty, as China and the United States are likely to have a series of twists and negotiations, which impacts costs of production, supply and demands, so short-term market volatility is inevitable.