Synthetic Resins
Sourcing Guide & Market Intelligence

Tariffs to negatively impact chemicals industry

• The United States imposed new tariffs of at least 10.0% on every trading partner, with the highest base tariff rate of 145.0% hitting China. The increase in tariff rates is expected to raise raw material prices that chemical manufacturers rely on and put upward pressure on chemical prices as many inputs are often unavailable domestically in large quantities.
• Certain chemicals, including polyethylene, polypropylene, polyethylene terephthalate, phenols, ethylene, and titanium dioxide are exempt from tariffs. However, according to Chemical Processing Magazine, tariffs, in general, are expected to add 2.0% to 5.0% to overall expenses for US chemical producers due to higher steel and equipment costs, as well as rising supply chain risk.
• China is a major supplier of chemicals to the United States, estimated to account for around 11.0% of total imports according to the US Chamber of Commerce. The majority of these imports are intermediate products that are used as inputs in domestic chemical production.
• According to the Society of Chemical Manufacturers and Affiliates (SOCMA), the higher US tariff rate on imports of chemicals will disrupt supply chains and raise operating costs for domestic chemical manufacturers. Increased input costs are typically passed on to buyers in the form of higher prices.
• The United States is the most important export market for Germany’s chemical industry, and major suppliers like BASF are expected to be negatively impacted by the 20.0% tariff on the European Union member countries. However, chemicals covered under the United States-Mexico-Canada (USMCA) agreement will be exempt from 25.0% tariffs on Canadian and Mexican goods, providing some relief for the highly integrated North American chemicals trade.

United States imposes sweeping tariffs on Canada and Mexico

• In February 2025, the United States announced 25.0% tariffs on imports from Canada and Mexico, which took effect on March 4, 2025.
• The tariff by the United States applies to all merchandise imported for consumption and applies in addition to other duties or fees that are in place. However, imported goods covered under the United States-Mexico-Canada Agreement (USMCA) will be exempt from tariffs until April 2, 2025.
• After the tariff took effect, Canada immediately imposed 25.0% tariffs on goods imported from the United States. Mexico also announced plans to impose retaliatory tariffs and non-tariff measures on imports from the United States later this month.
• On March 12, the United States raised tariffs on steel and aluminum imports from all countries to 25.0%, including Canada and Mexico.
• This market sources goods from an affected country. As such, ProcurementIQ will continue to monitor developments in this space and update analysis accordingly.

Inflation climbs above 3.0% for the first time in seven months

• In January, the Consumer Price Index (CPI) 12-month inflation rate, the most commonly used measure of inflation, rose by 0.1% to 3.0%, the highest it has been since June 2024.
• This uptick in inflation follows cuts to interest rates which may have added to consumer demand, fueling higher consumer prices.
• Additionally, the threat of impending tariff hikes has driven preemptive stockpiling by importers, adding to demand and price growth across a range of industries in the United States.
• While inflation is still low relative to previous years, sustained recent increases in inflation and the potential effects of tariffs, such as the recently implemented 10.0% on all Chinese goods, mean prices are still rising at a faster-than-normal pace.