Tariff policy reversal puts pressure on plastics and chemicals industry landscape

From February 20 to 24, 2026, U.S. tariff policy underwent a dramatic reversal—first repealing then reimposing duties—becoming a pivotal factor disrupting the global plastics market. The U.S. Supreme Court ruled the previous tariffs unlawful, prompting the government to immediately impose a 15% provisional tariff under new legislation and relaunch a Section 301 investigation. Amid growing uncertainty over U.S.-China trade prospects, the plastics industry faced a comprehensive reshaping of costs, supply-demand dynamics, and trade flows, significantly intensifying market volatility.

On February 20, the U.S. Supreme Court ruled that the tariff imposed by the Trump administration under the International Emergency Economic Powers Act lacked legal authority, and the policy was officially canceled. As the market anticipated a more stable trade environment, the U.S. government quickly switched legal bases on February 24, imposing a 15% temporary tariff on global goods under Section 122 of the Trade Act of 1974, with an implementation period of 150 days, while also initiating a new Section 301 investigation. During the transition between the old and new policies, plasticizer products, as a category with high global trade volume and strong supply chain linkages, became a key target of the policy impact.

On the cost side, tariff adjustments have directly pushed up the pricing benchmark for imported raw materials. China’s plastic products exhibit a high degree of import dependency: as of the first three quarters of 2025, the import dependency for POE remains as high as approximately 95%, while that for PE and PP stands at 18% and 22%, respectively, and that for PVC is around 15%. North America is a major source of these imported products; the 15% provisional tariff has directly increased the cost of imported goods by RMB 1,200–1,800 per ton, supporting an upward adjustment in the domestic spot price floor. Meanwhile, tariffs have intensified global trade barriers, driving up international shipping and logistics costs; coupled with oil prices rising amid geopolitical conflicts, cost-side support for the plastics and chemical industry is robust, directly influencing the sector’s overall valuation.

In terms of trade and supply and demand, the industry structure shows a structural divergence. On one hand, the cost of transporting plastic products, which are mainly exported to the United States, has significantly increased, leading to a rise in the risk of overseas order transfers, thereby indirectly weakening the demand expectations for upstream raw materials; on the other hand, tariff barriers are driving the local reconstruction of the global supply chain, with capacity substitution effects becoming evident in regions such as Southeast Asia and the Middle East. This forces Chinese plastic enterprises to readjust their export directions, leading to a reshuffle in the global plastic trade pattern. In the domestic market, after the holiday, the resumption of work in downstream sectors is gradually advancing, with demand in areas such as packaging and construction materials slowly recovering. Under the weak balance of supply and demand, policy fluctuations have become the core factor in determining the industry's trend.

In the market, heightened risk-aversion sentiment and policy-related speculation have intensified sector volatility. On February 24, the day the policy was implemented, domestic prices of related chemical products such as plastics and PVC rose immediately, with PVC surging 2.3% and plastics increasing by approximately 1.8% in a single day. In the short term, uncertainty surrounding tariff policies will continue to suppress market risk appetite, making product prices highly susceptible to news-driven volatility and resulting in wide-ranging fluctuations. Over the medium to long term, if the Section 301 investigation escalates further and trade tensions continue to spread, the export-oriented segments of the plastics and chemical industry will remain under sustained pressure. Demand-side drags could offset cost-side tailwinds, leading the sector as a whole into a pattern of repeated volatility.

The recent unexpected adjustment of U.S. tariffs has pushed the plasticizing industry into a period of high policy volatility. Subsequently, attention should be paid to the temporary tariff exemption scope. If basic chemical products are exempted, the negative impact of the policy will be significantly weakened. Secondly, the progress of the Section 301 investigation should be closely monitored, as its outcome directly determines the long-term direction of Sino-U.S. plastic and chemical trade. Finally, the domestic downstream resumption pace should be tracked, as the actual demand realization will affect the market's actual driving effect from cost support.