Who Blinks First? China May Exempt Tariffs on US Ethane & Other Goods
By now it’s become increasingly clear that both the U.S. and China are eager to de-escalate the trade war, yet neither is willing to make the first move. In China, export orders are drying up, and factories are shutting down. Meanwhile, across the Pacific Ocean in the U.S., containerized cargo volumes through the Port of Los Angeles are teetering on the edge of a very sharp decline, threatening to send shockwaves through Southern California’s economy and beyond.
Early Friday, several media outlets reported that China’s government has either considered or exempted some U.S. imports from a 125% tariff rate.
Let’s begin with Bloomberg, which cited people familiar with the matter who said Beijing is considering removing tariffs on medical equipment and certain industrial chemicals, including ethane.
As we noted earlier this week, the U.S. is a major supplier of ethane—a petrochemical feedstock and component of natural gas. Ethane is a critical input for China’s plastics industry, with few alternative suppliers outside the U.S. Needless to say, any disruption to ethane shipments would severely impact China’s plastics sector.
Those sour
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