Trump’s Tariffs Deliver Fresh Blow to Struggling Petrochemical Industry

President Donald Trump’s latest wave of import tariffs, announced on April 2, 2025, is expected to deal a significant blow to an already struggling sector. While oil, gas, and refined products are exempt, key petrochemical feedstocks such as naphtha and the chemicals derived from it are not — and that’s causing alarm across global markets.

Prices for products like electronics, packaging, and appliances — all made with petrochemicals — are likely to rise, cutting into consumer demand and shrinking profit margins for producers.

“In export-driven economies, these tariffs could delay the recovery of petrochemical margins by another six to twelve months,” said Pankaj Srivastava, senior VP at Rystad Energy.

Margins Fall, Shutdowns Loom

Naphtha margins in Asia fell by 13% to $73.07 per metric ton over Brent crude on Thursday — the lowest since January 2025. The collapse in margins comes after they hit $257 per ton in 2022, driven by fears of Black Sea supply disruptions during the Russia-Ukraine conflict.

Since then, the landscape has changed. Demand is softer, while China has flooded the market with new capacity. Now, with tariffs threatening to further limit exports, plants in Taiwan, South Korea, and Japan may be forced to shut down completely.

“We’re already operating at the bare minimum,” said a senior official at a global petrochemical trading firm. “These new tariffs could push many over the edge.”

Shift in Global Trade and Strategy

To stay afloat, US producers have shifted toward cheaper feedstocks like ethane over naphtha. Meanwhile, producers in Asia and Europe are offloading older assets and closing less efficient plants.

The new tariffs may lead to more than just financial pain — they could reshape global supply chains, already weakened by sanctions on Russian oil and Red Sea shipping disruptions caused by Houthi attacks.

Both China and the European Union have promised retaliatory trade measures, adding further uncertainty to a volatile market.

What Lies Ahead for the Petrochemical Sector?

Most forecasts now see no meaningful recovery for petrochemical margins before 2027 or 2028, when the wave of Chinese capacity additions begins to ease. Until then, the industry will have to grapple with rising trade barriers, geopolitical tensions, and increasing calls to decarbonize and innovate.

For now, the message from global producers is clear: the storm is far from over, and Trump’s latest tariffs have only made the outlook gloomier.

Source Bizcommunity}

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