Mountie(ing) Challenges for Canada, and The US – More Polyethylene Dislocations

The proposed tariffs on Mexico and Canada surprised both countries, but maybe Canada the most, as it is unclear what the Trump Administration wants in a negotiation – more/cheaper Maple Syrup?
While we focus on the chemical and polymer trade, the largest challenges will be in oil and gas and automotive, where the US/Canada trade is significant in both directions. Tariffs will mean higher fuel and auto prices.
Polyethylene is a significant export from Canada to the US as pellets and film. Pellets can easily be rerouted/swapped – more Canada to broader exports – more US polyethylene stays in the US.
Retaliatory tariffs would cause higher pricing in many regions, autos, fuels, polymers, but also food (Canadian food exports to the US and much larger Mexican food exports to the US). The US negotiating leverage is high!
Otherwise, in a light week, we look at other Chinese chemical surpluses, further declines in polyethylene pricing, the strength in methanol, why “drill-baby-drill” may not amount to much, and green hydrogen’s demise.

Exhibit 1: Fuels and Autos rank highest in terms of Canadian exports to the US.