Segrist: China-US Trade War Finds a Plastic Peace

Regardless of where the U.S. and China stand in their forever trade dispute, the people who make and sell ethane should feel secure.

Certainly more secure than the people trying to keep track of the day-to-day changes. It’s difficult to write about a tariff war when the status of the war changes before the bit you’re writing can get a second edit.

As of May 12, the U.S. and China had announced a 90-day tariff reprieve. The Trump administration will drop its tariff from 145% to 30%, the Chinese from 125% to 10%. The markets sang their praises, and the Dow rose by 1,200 points.

The next step, according to the analysts, was a scramble to secure supply chains for 90 days, after which, who knows?

However, the trade war has revealed one point of certainty: China really needs ethane.

It should not come as a big surprise. It makes sense that the world’s biggest manufacturing nation (28.4% of global output) would depend on a chemical that is a key ingredient in just about every step of the manufacturing process, including the final product.

Ethane is used to make ethylene, a building block for plastic, antifreeze and detergents. People burn it for fuel or use it as a refrigerant. China, the source for most of the cheap plastic stuff for sale on Amazon, is wholly dependent on U.S. ethane to feed its petrochemical crackers.

As the trade war spun up, China found it could temporarily refuse a lot of petrochemical products. The country does not import much U.S. crude. China has spent most of 2025 reselling its U.S. LNG cargoes to fetch a higher price.

Chinese businesses even cut orders of LPG. According to analytical firm RBN Energy, China imports a lot of U.S. LPG—second in value only to imports of electronic products.

Ethane, however, went untouched. The news broke that China would not tariff ethane just as Enterprise Products Partners executives were sitting down to hold their first-quarter earnings call in late April.

“I’ve never seen U.S. hydrocarbons get this much attention worldwide,” Enterprise CEO Jim Teague said during his introductory talk. “But now it appears China is going to exclude ethane and ethylene from their tariffs to protect their petrochemical business.”

Enterprise and Energy Transfer are key U.S. exporters of ethane. A week later, during their earnings call, Energy Transfer executives reported the status of the ethane business was normal.

“Regardless of what everybody is hearing about all the negativity around what’s going on in China and other areas, we’re not having a problem finding a home for our product or ethane or LPG,” said Mackie McCrea, co-CEO of Energy Transfer. “In fact, we did a deal this morning for another ethane spot cargo to China.”

Energy Transfer said it would continue its installation of a 250,000-bbl/d expansion at its Nederland NGL export terminal throughout 2025.

Both Enterprise and Energy Transfer reported that the ongoing trade dispute between the U.S. and China has had no effect on their ethane volumes shipped or on upcoming orders, which was in line with analyst expectations.

“Major players did not observe any decline in ethane export demand leading up to the tariff waiver,” Julian Renton, energy analyst for East Daley Analytics, said in an email to Oil and Gas Investor. “In fact, Enterprise Products Partners reported a 68-Mbbl/d increase in ethane exports out of Morgan’s Point [export facility]. The market had largely priced in the expectation that the tariffs would be waived, with both U.S. and international petrochemical players continuing to operate as if access to U.S. ethane would remain uninterrupted.”

As Teague said, a lot of attention became focused on ethane. The U.S. Energy Information Administration forecast strong growth in U.S. ethane production and exports for 2025.

The U.S. will produce about 2.9 MMbbl/d of ethane this year and 3.1 MMbbl/d next year, up from 2.8 MMbbl/d in 2024, according to the EIA.

Ethane’s strong position even drew some attention from CNBC TV analyst Jim Cramer, who said on a broadcast that the U.S. should leverage the chemical in its negotiations.

“But the building block of all that stuff is Louisiana ethane,” Cramer said. “If the president and [White House trade adviser Peter] Navarro and these trade guys were to say, ‘You know what, guys? We saw that you wouldn’t tariff ethane, ’cause you need it so bad. We’re done, we’re gonna ship it to Korea,’ then see what happens … That’s what they should do. That’s like, free advice there.”

(Of course, the caveat being it’s Jim Cramer, and we’ve all seen the memes.)

China’s move on ethane signaled that the country could be considering negotiations, after publicly holding a tough line.

As of late April, the government insisted it was not talking to the U.S. at all and had started blasting its state media with images of the People’s Republic of China founder Mao Zedong and promising it would not back down to bullies.

Behind the scenes, however, the government’s ministers were aware of the predicament they were in, according to a Reuters report. The country faced isolation from its other trading partners who had joined the U.S. in negotiations.

With petrochemical products, there is too much international demand willing to take up any slack from a Chinese embargo. Enterprise’s Teague noted in his call that the company had seen a temporary change in NGL demand after China put its retaliatory tariffs in place.

Teague said international agencies specializing in petrochemicals are responsible for the actual transport and overseas marketing and had been able to adjust to the situation.

“The market has already gone to work rerouting barrels between the world’s biggest LPG suppliers—the U.S. and the Middle East—and the biggest importing countries, being China and India,” he said.