China has quietly waived the 125% tariff it imposed on U.S. ethane imports earlier this month, two sources familiar with the matter told Reuters on Tuesday, offering unexpected relief to petrochemical firms that rely heavily on the feedstock.
The exemption, which has yet to be officially announced by Chinese authorities, comes amid growing concerns over the economic strain of Beijing’s ongoing trade war with Washington.
The waiver was granted in recent days, according to the sources, who requested anonymity due to the sensitivity of the issue. China’s Ministry of Commerce and customs authorities did not respond to requests for comment after business hours.
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While no official confirmation has been made, the development is already being interpreted as a tactical retreat by Beijing, a quiet concession aimed at shielding its industrial base from a retaliatory tariff that risked hurting domestic companies more than their U.S. counterparts.
The tariff had been imposed earlier this month after China raised levies on various U.S. goods, including ethane, in response to a renewed escalation in tariffs by U.S. President Donald Trump. The move raised China’s import duty on U.S. ethane to 125%, making purchases financially unviable for Chinese importers and threatening to disrupt supply chains in a key sector of the country’s manufacturing economy.
But the economic blowback appears to have prompted a reassessment.
The tariff waiver now allows major Chinese ethane importers — including Satellite Chemical, SP Chemicals, Sinopec, Sanjiang Fine Chemical, and Wanhua Chemical Group — to resume purchasing from the United States without the added financial burden. These firms use ethane as a key raw material to produce ethylene, which in turn feeds into the manufacture of plastics, textiles, packaging, and other petrochemical derivatives.
U.S. exporters such as Enterprise Products Partners and Energy Transfer, which operate ethane export terminals along the Gulf Coast, also benefit from the reversal. Their shipment volumes to China had come under threat following the tariff hike, despite rising global demand for ethane.
The United States exported a record 492,000 barrels per day of ethane in 2024, according to the U.S. Energy Information Administration (EIA), with nearly half of that volume destined for China. The EIA projects U.S. ethane exports to increase further to 530,000 bpd in 2025 and 630,000 bpd in 2026, underscoring China’s importance as a growth market.
The waiver has raised questions about whether Beijing is softening its stance under pressure, a sign that tariffs, particularly those targeting energy and industrial feedstocks, could have unintended consequences for its own economy.
Still, the broader implications for the U.S.-China trade war remain unclear. The waiver appears to be narrowly focused and driven more by industrial self-interest than by a broader policy shift. It follows similar exemptions granted last week for select pharmaceutical, semiconductor, and aerospace-related products — sectors considered strategically vital for China’s domestic ambitions.
Beijing appears to be insulating key industries from escalating costs without signaling an end to the overall trade dispute by removing tariffs selectively. The gesture does little to resolve the deeper disagreements between the two countries, including technology transfer, supply chain security, and market access.
However, some have warned that this should not be misread as a de-escalation, noting that the ethane tariff waiver is more about avoiding self-inflicted damage than seeking reconciliation.
While the tariff rollback provides short-term certainty for buyers and sellers in the ethane market, it does not eliminate the volatility introduced by the broader geopolitical context. Market participants remain cautious, especially given the opaque nature of China’s policy decisions and the absence of formal communication from the Ministry of Commerce.
For now, the waiver removes an immediate obstacle for Chinese firms reliant on U.S. ethane, but it leaves unanswered whether Beijing intends to reimpose the tariff at a later date or extend similar relief to other energy commodities caught in the trade war.
However, China’s reversal on ethane has stoked interest across the board, not just of petrochemical executives, but of global market leaders looking for clues about how far Beijing is willing to go to shield its economy from the costs of confrontation.