Tariffs: Trading One Problem for Another!

C-MACC Sunday Theme and Weekly Recap

Tariffs: Trading One Problem for Another!

• Much like the unaffordability of energy transition, trade tensions were alive and well long before the US election. They are now much more in focus, given the Trump Administration’s view on trade and tariffs.
• China’s rapid manufacturing growth has been accompanied by slower local demand growth – accelerating the move to surplus, but at the same time, it has rapidly ridden the technology wave – cheap and good products.
• Huge market dominance in critical materials and components for energy transition gets the most attention, but China is now on the critical path to much broader manufacturing chains globally. Can it/should it be stopped? 
• We see Brazil raising tariffs in many industry sectors as the country has become the dumping ground for products from solar modules to polyethylene and ammonia. An isolationist US poses a bigger potential upset.
• Otherwise, we look at the risk of lower oil prices in 2025 and implications for US chemicals, question the future of green hydrogen (again), and a possible US/Europe trade, defense, and transition grand bargain.

Exhibit 1: One of the pieces of the global trade puzzle that the US could put at risk is the growing volume of NGL net export and, of course, LNG – See Exhibit 2.

Source: EIA

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