The Sino-U.S. trade war, which began in 2018, has seen both sides impose tariffs and restrict technology exports to pressure each other economically. In the chemical industry, the friction has been particularly intense. China is the world’s largest consumer of chemical products, while the U.S. is one of the leading chemical producers globally, with significant trade in multiple chemical sectors.
However, the as trade war escalated, in April 2025, the U.S. imposed a 104% tariff on Chinese goods, triggering global trade market turmoil and pushing the trade war into a critical phase. In response to the U.S.’s tough stance, China retaliated by imposing an 84% tariff on U.S. goods. These escalating tariff policies have had profound impacts on the economies of both countries and the global trade landscape.
I. Comparison of Chemical Exports Between China and the U.S.
1. China’s Exports to the U.S.
In 2024, China exported approximately $24.38 billion worth of chemical products to the U.S., primarily consisting of bulk and basic chemicals, including:
– Basic chemicals: such as inorganic chemicals, fertilizers, and plastic raw, materials widely used in agriculture, construction, and electronics.
– Textile chemicals: including dyes, coatings, and other chemical raw materials for textiles.
– Rubber and plastic products: such as automotive parts, electronic device casings, and toys.
– Pesticides and fertilizers: especially low-end pesticides and fertilizers to meet U.S. agricultural needs.
– Organic chemicals: such as common industrial solvents and basic organic raw materials.
These products are typically bulk commodities with relatively low prices, minimal production process requirements, and China a has cost advantage in these areas.
2. U.S. Exports to China
In 2024, the U.S. exported approximately $21 billion worth of chemical products to China, mainly high-tech and high-value-added products, including:
– Advanced chemicals: such as specialty chemicals, additives, and catalysts, used in high-tech industries like electronics, automobiles, and aerospace.
– Fine chemicals: including pharmaceutical intermediates, pesticides, coatings, and dyes, which require advanced production processes and technologies.
– Plastics and resins: such as high-performance plastics used in the automotive, construction, and electronics industries.
– Pharmaceutical chemicals: As a major global producer of pharmaceuticals and biomedicines, the U.S. exports many drug intermediates and active pharmaceutical ingredients to China.
These products typically require high levels of technology and precision manufacturing processes, meeting China’s demand for high-tech and high-value-added products.
II. Impacts on China’s Chemical Industry
1. Export Obstacles
The U.S. tariffs on Chinese chemical products have significantly weakened China’s price competitiveness in the U.S. market. In 2024, China’s fertilizer exports dropped by 59% year-on-year, primarily due unstable to domestic supply, reduced price competitiveness, and weak international demand. Additionally, U.S. tariffs on Chinese rubber products have made it difficult for Chinese tire companies to export to the U.S., prompting some enterprises to set up factories in Southeast Asia to avoid tariffs.
2. Rising Import Costs
China’s tariffs on U.S. imports have increased the cost of importing light hydrocarbon cracking feedstocks such as ethane and propane. In 2024, China imported 5.53 million tons of ethane, almost entirely from the U.S., accounting for 46% U of.S. ethane exports. The increase in tariffs could lead to higher production costs or supply constraints for ethane and its downstream derivatives (such as ethylene, polyethylene, and ethylene glycol).
3. Industrial Chain Adjustment
Faced with export obstacles and rising import costs, China’s chemical industry has accelerated its industrial chain adjustment. On one hand, companies have improved industry concentration through mergers and acquisitions, completing several major merger transactions in 2024 with a total transaction value of 150 billion yuan a, 20% year-on-year increase. On the other hand, companies are accelerating the green transformation of traditional sectors to adapt to environmental policies and changing market demands.
4. Policy Support and Technological Innovation
To address the challenges posed by the trade war, the Chinese government has increased support for the chemical industry. Through industrial funds, tax incentives, and direct subsidies, the government is promoting the research and mass production of key materials. For example, in the fields of high-end electronic chemicals such as semiconductor wet chemicals and OLED emissive materials, domestic companies have continuously increased R&D investment, gradually narrowing the technological gap with international giants.
5. Market Diversification
Faced with trade barriers in Europe and the U.S., Chinese chemical companies are actively expanding into other international markets. Emerging markets in Southeast Asia and Africa have become key targets. For instance, Vietnam, with its growing agricultural demand, offers opportunities for China to reduce regional tariff barriers through the RCEP framework, offsetting the decline in exports to the U.S.
III. Opportunities and Challenges for the Chemical Industry
1 Increased Market Uncertainty
Due to the uncertainty in trade policies between the two countries, chemical companies face challenges such as price fluctuations and supply chain disruptions. Rising prices of raw materials and intermediates directly impact production costs, especially in bulk product sectors like plastics and fertilizers, putting downward pressure on global market demand.
2. Industry Innovation and Accelerated Transformation
While the Sino-U.S. trade war has increased market uncertainty, it has also driven innovation and transformation in the chemical industry. Chinese companies are increasing investments in green chemistry, high-end chemicals, and environmental technologies, while the U.S. maintains its technological leadership in fine and high-tech chemicals. Companies in both countries are leveraging technological innovation and product upgrades to gain an edge in a more diversified global market.
3. Rise of Alternative Markets
As the trade war continues, the global chemical market landscape has undergone significant changes. Emerging markets in Asia, Latin America, and Africa are becoming alternative markets for chemical products from both countries. In particular, Southeast Asia and India, with their lower production costs and relatively stable market environments, are attracting substantial international chemical investment. This trend is also driving adjustments in the structure of global chemical trade.
Conclusion
The impact of the April 2025 Sino-U.S. trade war on China’s chemical industry is multifaceted. While export obstacles and rising import costs pose challenges, policy support and technological innovation provide momentum for development. In the future, Chinese chemical companies need to find new breakthroughs in global layout, green transformation, and high-end development to achieve high-quality industry growth. The “stress test” of the trade war may serve as a catalyst for the transformation of China’s chemical industry from “quantity” to “quality.”
