US-EU tariffs frenzy: A look at PE and beyond

The ongoing trade tensions between the US and the EU have stirred unease in global markets, particularly within the petrochemical industry. A key area of focus is PE, a vital material used in numerous industries ranging from packaging to construction. As the market slowly digests the impact of the tariff news amid a three-month freeze on import duties, questions swirl around how PE dynamics will shift particularly if certain PE products are excluded from the EU’s retaliatory tariff list as alleged or not.

In a recent development, there are speculations about the EU planning to exclude most US LLDPE and mLLDPE imports from its final list of retaliatory tariffs, although this awaits clarity. If this exclusion is applied as planned, it suggests that the EU intends to maintain access to essential LLDPE and mLLDPE products, where local supply does not meet demand. If not, there is a rocky road ahead for European converters using particularly mLLDPE.

Europe has been increasingly reliant on PE imports given the double whammy of extremely competitive pricing environment and supply glut since 2016, although its LDPE needs are less than LLDPE and HDPE grades given its installed capacity.

According to a European Commission document listing proposed countermeasures, other PE tariff codes remain under review for potential 25% duties. Following Trump’s decision to pause planned reciprocal tariffs for 90 days, the European Union responded by delaying its own countermeasures. Despite the temporary pause, the United States, one of the world’s largest producers and exporters of PE, could still be subject to retaliatory tariffs. However, the timeline and scope of the EU’s retaliatory actions remain uncertain beyond the 90-day pause period.

What do US PE imports mean for the EU27?

The EU27 imported 1.8 million tons of US PE in 2024, representing 36% of total PE imports, according to ChemOrbis Stats Wizard. It remains reliant on certain LLDPE grades from the US, with mLLDPE accounting for the half of the overall US PE imports last year at around 900,000 tons.

That is to say, the United States is the most critical supplier of mLLDPE. Over 60% of the EU’s total mLLDPE imports come from the US, indicating a significant dependency. Diversifying supply sources in this product group could be challenging for the EU in the short term.



Although the union imports smaller tonnages of LDPE compared to other PE grades, the US also plays a strong role with a 36.5% share. For HDPE and LLDPE, the US has a lower share – around 25% or less– suggesting greater supplier diversity and less dependency; however, the deficit for US HDPE will be still bigger than the combined loss for US LDPE and LLDPE imports in terms of tonnages.

If EU exempts US LLDPE from tariffs, what will unfold for HDPE and LDPE?

Should the risk of tariffs on LLDPE and mLLDPE recedes along with this alleged exemption, there will be no specific concerns about supply shortages for these products in the medium term. However, the supplier landscape for other PE products - namely HDPE and LDPE - will highly likely shift when tariffs are imposed, as market participants are now assessing alternative sourcing options.

Who will step in?

Suppliers from the Middle East and Far East Asia are well-positioned to ramp up their sales to Europe in an effort to compensate for their loss in China. Buyers will seek more material from Saudi Arabia, which will help regain its market share of LDPE and HDPE lost over the US in the past two years. There are also rumors circulating that major producers have already sold out from their Mid-Eastern HDPE plants.

South Korea, which raised its market share for LDPE and HDPE from around 5% to 10% in the past five years, may boost exports to the bloc further, should China go on with the capacity additions. According to ChemOrbis Supply Wizard, China plans to commission around 4.5 million tons of new PE capacity by the end of this year.

On the trading side, meanwhile, sellers who rely heavily on the ability of US-produced PE will be affected by this disruption. While some of them still plan to import US materials as prices might be still competitive, others think that US PE might even be re-exported from South America.

Long story short, even though the supplier panorama will change notably in the absence of the US across European HDPE and LDPE markets, the damage to these products appears to be reparable from the bloc’s side, with more imports from Far East Asia and the Middle East.

If EU does not grant mLLDPE exemption, an uphill battle awaits for European converters

Metallocene-grade PE accounts for 35% of the EU’s total PE imports, or roughly 1.5 million tons. While the primary suppliers outside the US include Saudi Arabia, South Korea, and Canada, whether these countries can reliably meet the EU’s demand is highly debatable —especially given the product’s severely limited global production capacity.

Broader implications on US PE: Potential outcomes of EU tariffs

PE is a key export for the US, and the EU ranks among its largest buyers. With China and the EU together accounting for 32% of all US PE exports, regaining lost market share will pose a significant challenge for US producers, potentially leading to a slowdown in operating rates to avoid supply glut. Longer term, shifts in global trade exacerbated by ongoing US-China tensions are likely to alter import flows toward Asia, Latin America, India and Türkiye. Even so, whether these markets will be able to compensate for this big loss is quite doubtful.

If the EU exempts mLLDPE from tariffs as speculated, this would also benefit US PE suppliers—whose largest export market is the EU, accounting for over 20% of their metallocene-grade shipments. This will just hit the spot, as they are poised to lose their second-biggest customer, China, which represents 15% of their exports.

A foggy outlook amid changing dynamics

Rising costs and eroding margins

As the PE sector is highly interconnected, the imposition of tariffs on other PE grades is expected to disrupt supply chains and raise costs for businesses, ultimately pushing up consumer prices and reigniting inflationary pressures. Rising input costs are likely to further erode the global competitiveness of European converters, potentially prompting them to favor importing finished products over domestic production to remain agile and adapt to shifting dynamics.

Short-term supply risks ahead

In case of duties, domestic suppliers will raise their offers in response to supply shocks. This could also affect the sentiment among import suppliers, including Saudi Arabia and S. Korea, which are ready to fill the supply gap left by the US. Supply from these regions may not be sufficient to fully replace the volume of US exports all of a sudden, leading to potential shortages or price hikes for a short time.

Uncertainty reigns

The impact of the proposed tariffs remains up in the air, as no final decisions have been made. Any projections remain speculative. However, European suppliers achieved some margin recovery in April, taking advantage of ongoing tariff uncertainty, by closing deals with rollovers or minor discounts despite €55/ton lower ethylene settlement, while May projections have emerged stable to softer.