There's a new tariff in town - China retaliates against propane and petrochemicals

On 4 April 2018, China fired a retaliatory salvo in the mounting US trade war. China proposed additional 25% tariffs on 106 products, ranging from cars to agricultural products to chemicals.  44 products related to chemicals or energy were put on notice with propane, polyethylene, and PVC garnering the biggest headlines in the chemicals space.  China imported 8% of US propane production last year, and only imported 5% of US polyethylene and PVC production. The reliance on China expands through 2025, especially in propane as China propane dehydrogenation capacity undergoes a second capacity “wave” in 2019-2021. US producers could manage a short-term tariff via alternative logistics or directing flows to Europe, but a lasting tariff would threaten the next wave of export-based petrochemical investments.