Petrochemical industry mostly dismisses negative effects of US tariffs on their operations

This content is part of the WPC 2025 series, where we explore key themes from the 40th annual World Petrochemical Conference.

Several companies in the petrochemical sector have dismissed serious negative effects from additional tariffs proposed by US President Donald Trump's administration.

Trump recently stated he wants to increase duties on Chinese imports to 20% and suggested a 25% tariff on EU goods. He also reiterated that a 25% tariff on all imports from Mexico and a 10% tariff on energy imports from Canada will take effect starting March 4.

However, leaders from petrochemical producers, converters and producers said during the most recent earnings season that they will be able to ignore most of the negative effects of the potential tariffs.

"I look around the world right now, easily plus 90% of what we produce is sold within those respective regions. And I think that, for us, that's a very good fit", said chemical producer Hunstman Corporation's CEO Peter Huntsman.

Similarly, others said their operations are scarcely linked to economies affected by the proposed tariffs.

"We do have some product flowing from Medicine Hat [in Canada] across the border into the US, but we're talking about a pretty small volume for what we sell in a year", said Richard Sumner, CEO of Methanex.

Some executives worried about the impact of tariffs will rely on optimizing their operations to hedge against any negative effects.

"At the end of the day, what we can control is how effective and efficient we are as operators," said Darren Woods, CEO of oil producer ExxonMobil. "All the work we've been doing over the last eight years has been to drive our production to the low end of the cost of supply [...] None of that's going to change with tariffs", he added.

Confidence in trade policy

Some companies are optimistic about the US tariff decisions.

"I don't think it's the administration's view to do something that's going to hurt the global economy. I think they want to try to create the situation where we continue to have growth and investment," James Fitterling, CEO of materials producer Dow, said.

The CEO of carbon producer Tokai suggested that any negative effects of the proposed tariffs in their operations would be offset by the growth in their US operations.

Others see President Trump's policies as a potential boon.

"Some imports from China, those are now subject to higher duties. So I think it was a positive effect for us at the end of the day. [...] The thing that could factor positively for us is if [...] some of the trade measures against some of the Asian overcapacity materialize," said Alpek's CEO Jorge Young Cerecedo.

Caution remains

Not all company executives share the same optimism. Polymer resin producer Advansix's CEO Erin Kane recognized that trade policy and tariffs remain the greatest potential risk for the automotive value chain in the near term, while other sources are already foreseeing and experiencing the effects of the proposed tariffs.

A distributor source in Paraguay pointed out that several buyers in the region made purchases in advance last December and in January to insulate themselves from risk.

Price rises are also a concern. Chemical producer LyondellBasell's CEO Peter Vanacker said that while they remain confident in their cost advantage in the US and the Middle East, they "remain watchful of the potential impact that tariffs could have on affordability."

Others fear that the tariffs will be seen as an opportunity for certain companies to improve their margins.

"If more demand is created for domestic producers, they tend to be more aggressive with their prices," a US nylon consultant source said.

"Across the board, tariffs on our biggest trading partners result in inefficient supply chains and higher costs in the near term," S&P Global analyst Robert Stier said. "It takes many years to increase production unless there is spare capacity which can immediately be ramped up. Hopefully, the announced tariffs are a negotiating tactic, and we see more targeted tariffs to minimize the negative impacts."

The US Commerce Secretary Howard Lutnick said on March 3 that the broad tariffs on Mexican and Canadian imports will still go ahead as planned on March 4, but President Trump will decide the final level.