Editor's Note

The United States, in the name of "adjusting the tariffs of trading partners", is actually practicing "indiscriminate trade bullying". Its unilateral tariff increase policy has evolved into a disorderly impact on the global industrial chain - many countries have chosen to compromise under pressure, trying to make concessions in short-term interests in exchange for easing trade disputes, and falling into a vicious cycle of "using land to serve Qin". Only China has not given up on principled issues, and with its firm stance of "counter-equal and bottom-line thinking", it has declared to the world that sovereignty and dignity cannot be traded. This is not only a positive response to bullying, but also a benchmark practice for emerging economies to maintain multilateral order in the context of globalization.

At 12:01 Beijing time on April 9, the so-called "reciprocal tariff" policy promoted by US President Trump officially came into effect, with the tariff rate on Chinese imports increased significantly from 54% to 104%. In response, the Chinese government announced on April 9 that starting at 12:01 on April 10, 2025, the tariff on imported goods originating from the United States will be increased from 34% to 84%.

In addition to the tariffs, the U.S. Trade Representative (USTR) also plans to impose a series of fees on international shipping companies that dock at U.S. ports. Under the new regulations, Chinese-flagged ships will be charged a fee of $1 million when entering U.S. ports. Non-Chinese operators, but ships built in China, will be charged a fee of $1.5 million when arriving at U.S. ports.

The rules are aimed at curbing China’s growing dominance in the shipping industry and revitalizing the U.S. shipbuilding industry. China’s share of the industry has grown from 5% in 1999 to 50% by 2023, according to the U.S. Trade Representative’s Office.

This series of radical measures has caused global trade shocks, and the plastics industry has also been deeply affected.

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Plastics Industry in China and the US

In 2024, China's exports of plastics and their products (HS code 39) to the United States will reach US$23.68 billion, accounting for 16.77% of total exports. China's imports from the United States tend to be primary plastics, while its exports to the United States tend to be plastic products.

The high tariffs imposed by the United States on China will ultimately affect the plastics industry chain mainly in the export of plastic products. China no longer has a clear price advantage in exporting plastic products to the United States, and China's exports to the United States may be hindered.

Taking the polyester industry as an example, China will export a total of 3.88 million tons of polyester filament in 2024 , of which only 65,000 tons will be exported to the United States, accounting for 1.7%; the cumulative export of polyester staple fiber will be 1.329 million tons, of which 45,000 tons will be exported to the United States, accounting for 3.4%. In terms of polyester bottle flakes, China will export a total of 5.847 million tons of polyester bottle flakes in 2024, but since the United States imposed high anti-dumping and anti-subsidy tariffs on Chinese bottle flake exports in 2015, China's bottle flake exports to the United States have been greatly reduced to a negligible level. The impact on the polyester industry chain will be concentrated on the export of terminal textiles and clothing. In 2024, China's total clothing exports will be US$298.9 billion, of which US$49.4 billion will be exported to the United States, accounting for 16.5%. The United States is one of the main markets for China's textile and clothing exports. The imposition of tariffs has greatly weakened the price advantage of domestic clothing exports, and the export costs of related companies have risen significantly.

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On the other hand, China is highly dependent on imports from the United States for some plastic raw materials. For example, in 2024, China's total PE imports from the United States will be 2.3874 million tons, accounting for 17.24%, of which HDPE imports will be 822,300 tons, accounting for 14.47%, LDPE imports will be 461,300 tons, accounting for 15.60%, and LLDPE imports will be 1.1038 million tons, accounting for 21.19%. The increase in import tariffs on the United States will increase the cost of PE imports, curb the amount of PE imported from the United States, and increase the supply of goods.

— 2 —

US tariff exemption dispute and global countermeasures

According to a tariff exemption list released by the White House on April 2, Trump's tariff plan may exempt certain plastic imports, including polyethylene, polypropylene and PET, from tariffs. This move may be intended to exclude US export-oriented plastic resins from other countries' counter-lists to ease the international retaliation pressure faced by related US industries. The list also includes nylon, polytetrafluoroethylene, polylactic acid and various grades of PVC.

Figure: HS39 project on the exemption list But Trump’s past policy reversals indicate that the exemption may only be temporary. For example, Trump has repeatedly gone back on his word on steel and aluminum tariff exemptions, causing chaos and uncertainty in the international market. The United States has a significant trade surplus in plastic resins (reaching US$23.8 billion in 2023), and the European Union, Canada, and others may list it as a target for retaliation. For example, the European Union will impose tariffs on US$5.9 billion worth of US plastic resins, and Mexico, Southeast Asia and other countries may follow suit. In 2024, approximately 15% of U.S. polyethylene production will be sold to EU countries.

Greg Moffat, president and CEO of the Chemical Industry Association of Canada (CIAC), said the exemptions do not alleviate the challenges that tariffs pose to manufacturers, suppliers and downstream industries.

On April 9, local time, the 27 EU member states voted to impose a 25% tariff on US imports in retaliation for the Trump administration's announcement on March 12 to impose tariffs on steel and aluminum on the EU.
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Response from the U.S. domestic plastics industry

Without Chinese imports, US companies will face rising raw material costs, supply chain disruptions and continued policy uncertainty, which will have an impact on the plastics industry far beyond the trade war itself.

Retaliatory tariffs imposed by China and other trading partners on U.S. products are affecting the petrochemical industry, which will lead to higher resin costs. Taking packaging as an example, many packaging manufacturers are scrambling to find alternative suppliers and adjust their sourcing strategies. Packaging companies that traditionally rely on imports of machinery or components from China find themselves at a crossroads. As tariffs on Chinese-made goods escalate, the cost of these basic items rises, disrupting established supply chains.

This uncertainty in global trade has also caused many companies to rethink their investment plans. Long-term capital projects have been put on hold, while some companies have tried to meet supplier requirements or diversify their sourcing strategies, often at great expense.

The U.S. Plastics Industry Association (PLASTICS) warned that comprehensive tariffs would disrupt supply chains, increase production costs, and weaken global competitiveness, and called for "targeted policies."

The American Chemistry Council (ACC) also expressed deep concerns about the new tariff policy. The organization emphasized that in the production process of chemical products, intermediate chemicals and basic compounds often need to be transferred across borders multiple times, and the new tariffs at each transit link may have a cumulative effect, ultimately leading to a sharp increase in overall production costs, which will greatly weaken the international competitiveness of domestic manufacturing in the United States. ACC President and CEO Kaduli emphasized that the implementation of tariffs has disrupted the originally smooth supply chain, cut off the close connection between markets, and greatly weakened the competitiveness of the US chemical manufacturing industry.

The Synthetic Organic Chemical Manufacturers Association (SOCMA) called for a "strategic, industry-informed approach" in a statement. "Many SOCMA members are now facing significant cost increases for the raw materials they rely on, which are often not available on a large scale domestically in the United States."

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Nestor DeMatos, vice president of integrated supply chain at U.S. chemical company Dow Chemical, said in comments submitted to the Office of the U.S. Trade Representative that these measures will increase Dow's costs by $65 million to $75 million per year. "In addition, uncertain costs such as highly restricted import/export capabilities, tight shipping capacity, increased inland transportation congestion and complexity, and severe disruptions to the global supply chain also need to be taken into account."

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Chinese companies' re-export trade model encounters obstacles

Previously, in order to circumvent the high tariffs on China's exports to the United States, some Chinese plastics companies set up factories in Southeast Asia or cooperated with local companies to re-export their products to the United States via Southeast Asia.

This time, the United States simultaneously increased tariffs on transit countries such as Vietnam (46%) and Mexico (25%). Without the protective cover of this "tariff preference", China's trade costs for re-exporting to the United States through Southeast Asia will rise rapidly, and the model of re-exporting plastic products to the United States will be unsustainable.

(Photo/Boxme)

The escalation of Trump's tariff policy is not only a continuation of the Sino-US trade war, but also a catalyst for the reshaping of the global plastics industry supply chain. Faced with this challenge, Chinese plastics companies should actively explore global markets such as Southeast Asia, Latin America, Africa, the Middle East and the European Union to reduce their dependence on a single market and enhance their international competitiveness.

China needs to find a balance between "stabilizing exports" and "promoting upgrades", while the United States needs to be wary of "shooting itself in the foot". In this complex game, only companies that are flexible and deeply engaged in technology can take the initiative in the new landscape!