EU Lifts Tariffs on US Polyethylene and Other Products in International Chemical Trade Relations

On August 28, the European Commission announced the details of the products for which tariffs on imports from the United States would be reduced following the agreement reached with the United States on August 21.

Regarding chemicals, the basic tariff, including that on polyethylene (PE), has been removed, which is considered to keep the original 6.5% rate unchanged. For the EU, the United States is a major source of polyethylene imports. The tariff reduction has intensified competition for manufacturers in the region, while for local buyers, reliance on US imports is increasing as geopolitical risks rise in other sourcing regions, such as the Middle East. In July, the European Commission launched efforts to rebuild the regional chemical industry, and how to protect the local chemical sector without creating new “barriers” with the US has become a key concern.

In July, European Commission President Ursula von der Leyen met with U.S. President Donald Trump. The United States will impose a 15% unified tariff on most EU products, including automobiles, semiconductors, and pharmaceuticals. Meanwhile, the EU will impose a 15% tariff on U.S. industrial products. Both sides have reached an agreement to lift the tariffs. Detailed information on the tariff changes for imported goods was announced on August 28.

The general 6.5% tariff of the EU on inorganic and organic chemicals, plastics, rubber, and other chemicals will be eliminated.

The United States has a strong international competitive advantage in the PE sector using shale gas ethane as raw material. It is the largest import source of low-density polyethylene (LDPE) for the European Union. Among the approximately 1.4 million tons of LDPE imported by the EU in 2024, the United States accounts for about one-quarter. For high-density polyethylene (HDPE), the United States is the second largest import source after Saudi Arabia, with about one-quarter of the 1.7 million tons imported in 2024 coming from the U.S. In terms of LDPE, the top import sources for the EU, besides the United States, also include Qatar, the United Kingdom, South Korea, Saudi Arabia, and other countries and regions.

Due to changes in the international geopolitical landscape and the continuous rise in energy costs, the competitiveness of Europe's steam cracking and other chemical production facilities has been steadily declining. Multiple large enterprises have successively announced the closure of production units. Numerous companies, including European chemical giants such as BASF and INEOS, have been reducing capacity to control the performance pressure caused by rising energy costs and weak demand, while accelerating the construction of new production facilities in Asia. The reduction of tariffs on the United States will inevitably lead to a large influx of low-cost goods from the US, further exacerbating the severe challenges faced by European chemical industry enterprises.

On the other hand, geopolitical risks in major procurement sources outside the United States, such as the Middle East, are rising. Information indicates that South Korea has already planned to reduce production capacity under state leadership. For consumers within the EU, lowering tariffs will help control costs.

On July 8, the European Commission announced a comprehensive strategy—the "Chemical Industry Action Plan"—aimed at revitalizing the EU's internal chemical industry. The plan positions the chemical industry as one of the pillar sectors supporting Europe's economic competitiveness and proposes measures to address the risk of shutdowns of key production facilities such as steam crackers. While the EU will evaluate and support the retention of certain production capacities, in order to avoid the creation of new tariff barriers, industry stakeholders widely call for a prudent approach.