China Reduces Oil Products Tariffs

The volatility of the China-United States trade war may finally be slowing down.  Only a few days after agreeing to phase one of a new trade deal, China has announced a one-year tariff exemption on six chemical and oil derivatives, a positive sign that tensions are easing, and progress is being made.  These exemptions become effective on December 26, 2019 and are set to expire on December 25, 2020.

According to Reuters, “The tariff waivers will apply to four chemical products, such as metallocene high-density polyethylene (HDPE) and a special grade of linear low-density polyethylene (LLDPE), and refined oil products that include white oil and food-grade petroleum wax.”  China is expected to quickly start purchasing more HDPE and LLDPE from the U.S., as opposed to their current partners in the Middle East.  The U.S. has been pushing materials to Latin America and Europe, but that is expected to change following the elimination of tariffs.  The exact value of the Chinese imports that are being affected isn’t known, but it is estimated to be in the $14 billion rage.

It’s important to note that tariffs on crude oil and other petroleum derivatives are still in place.  China is importing a relatively minimal amount of crude oil from the U.S., approximately 150,000 bpd according to  However, on December 6th China agreed to purchase more soybeans and pork products from the U.S. in exchange for the U.S. cancelling new tariffs set to take effect on December 15th, so despite crude oil tariffs remaining in place, the trade war is trending in the right direction and may conclude sooner rather than later.

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