For the most part, the story of the tariff war between China and the United States has been that, by ratcheting up the tariffs, China has far more to lose because it imports much less from the United States than the U.S. does from China.
And, this is generally true — but the tale of woe befalling China’s plastics industry shows that a slowdown in U.S. imports could put a major dent in their export trade, as well.
According to the Singapore Business Times, plastic factories across China might come to a halt as “[t]he world’s dominant plastics manufacturer” is now forced to go without a critical ingredient in production, which it mostly gets from the United States.
On Monday, Bloomberg noted that China’s purchases of liquefied natural gas, or LNG, dropped to zero in March — and the imports were frozen before the tariffs kicked in.
“Overall delivery of US LNG shipments in the first quarter of 2025 fell by 70 percent, according to Chinese official custom data released on Sunday. The hiatus is the longest since the last trade war triggered during U.S. President Trump’s first tenure, when China didn’t receive cargoes for about 400 days,” Bloomberg reported.
“The geopolitical conflict is once again decoupling the world’s largest LNG buyer and seller. An escalation in mutual tariffs has led China to impose a 125 percent tariff on all U.S. goods, turning to Indonesia and Qatar for supplies.”
However, that’s not going to cut it for a Chinese plastics sector that was already dealing with an oversupply issue.
That’s because almost all of the ethane — which is a component of natural gas which is used in the plastics production process — that Chinese manufacturers used came from the United States.
“The situation is dire for China’s ethane crackers [factories] as they have no alternative to U.S. supply,” Manish Sejwal, an analyst at Rystad Energy, told the Singapore Business Times.
“Unless they are granted tariff exemptions, they may have to stop production or close shop.”
Are Trump’s tariffs going to put America in a better position?
The numbers don’t lie: With China’s 125 percent tariffs on U.S. imports, plastic factories would lose $184 for every ton of ethane processed. With no tariffs, they would be making over $100 per ton.
“Across China, domestic ethane production will not be able to plug the gap, with the nation producing around 120,000 tonnes in 2024, according to industry consultancy JLC International,” the Business Times reported.
“Furthermore, the ethane market ‘is marked by long-term contracts, with little to no opportunity to resell cargoes on the spot market,’ Rystad said April 10, making it tough for the Chinese to obtain alternative supplies from non-U.S. sources.”
And Indonesia and Qatar — neither of which are petroleum-poor — still can’t make up from the LNG from U.S. sources.
Now, granted, China’s plastic sector was already facing issues, and perhaps a pause in production occasioned by LNG shortages may work out fortuitously — but I would doubt it.
Not only are Chinese products becoming uncompetitive in the U.S. market due to tariffs, but their own tariffs have made the raw materials needed to make those products uncompetitive, as well.
But then, what did Beijing expect would happen — that this order was sustainable forever? It worked well enough for them, obviously: They’ve abused and abrogated every major trade agreement they’ve been a part of. They’ve manipulated their currency illegally to gain a trade advantage. They’ve engaged in dumping and intellectual property theft. They use slave labor, and they force foreign companies to censor anything moderately controversial to enter their market.
Will these tariffs cause pain for Americans and others in the West? Absolutely. But this is just one of the numerous signs that this will be worse for China, the worst major actor on the global trade stage, which has set up a model that isn’t economically sustainable if the rest of the world refuses to play along.
The sooner it crumbles, the better.
Advertise with The Western Journal and reach millions of highly engaged readers, while supporting our work. Advertise Today.
