From Factories to Farms: Trade Risks Signal Global Shifts

With potential new US tariffs taking effect this week on Mexico, Canada, and China, retaliatory risks are also rising that could disrupt supply chains, pressure US exports, and create volatility in chemicals and agriculture.
A weaker Chinese yuan and falling freight rates are increasing competition from Asia’s oversupplied markets and putting downward pressure on global prices, a headwind for US exports even excluding retaliatory risks.
Recent US macroeconomic data supports many tepid chemical company views of early 2025 demand, and we argue that ongoing trade disputes and potentially higher domestic prices could hinder consumer spending.
We discuss agricultural product exports from the US to China, Mexico, and Canada, as well as US polymers most exposed to the export markets, and highlight some domestic producers that could benefit from higher US tariffs.
Otherwise, we flag global chemical and agriculture companies with “produce local to serve local” footprints, such as BASF, being less exposed to trade disputes than others, and key items from our research last week.

Companies Mentioned: BASF, Nova Chemical, Westlake, SABIC, Dow, LyondellBasell, LSB Industries, CF Industries, Nutrien, Phillips 66, ExxonMobil, Chevron, Orbia, Olin, Kem One, ONGC, PTT Global Chemical, Braskem, Shell, Huntsman, BP, TotalEnergies, Air Products, Heartland Polymers, Enterprise Products, Aramco, Sinopec
Products Mentioned: Polyethylene, Ethylene, Polyvinyl Chloride, Polypropylene, Propylene, Benzene, Corn, Soybeans, Ethanol, Hydrogen, Ammonia, Polyurethane, Crude Oil, Natural Gas, Ethane, Naphtha

Exhibit 1: US natural gas strength relative to crude oil and a strong USD pose headwinds for US chemical exporters YoY.