China Lifts 125% Tariff on US Ethane Imports

China has removed a 125% tariff on US ethane imports, easing trade restrictions that had affected a key segment of the US-China energy relationship, according to a report from Reuters on Tuesday. The tariff removal is seen as part of broader trade negotiations, but no formal agreement has yet been announced.

The tariff was initially imposed earlier this month as part of China’s response to the latest round of tariffs introduced by President Donald Trump under his Liberation Day tariff campaign. The decision to lift the levy marks a shift in trade dynamics, especially significant for US producers and Chinese petrochemical companies.

China purchases approximately 50% of US ethane exports annually, according to the US Energy Information Administration. The waiver is expected to benefit Chinese companies including Satellite Chemical, SP Chemicals, Sinopec, Sanjiang Fine Chemical, and Wanhua Chemical Group, all of which rely on US ethane as a feedstock for petrochemical production.

On the US side, major ethane exporters such as Enterprise Products Partners and Energy Transfer will regain a critical outlet for ethane, a byproduct of shale gas production. The removal of the tariff could reduce inventory pressure and support prices in the US natural gas liquids market.

China’s decision adds ethane to a growing list of American products for which it has granted tariff exemptions during the ongoing trade conflict with Washington. The move may also provide relief for US energy firms with export-oriented operations, including those with supply commitments to Asia.

The announcement coincided with remarks by US Treasury Secretary Scott Bessent at the White House, where he argued that China’s retaliatory tariffs were not sustainable. Bessent claimed that maintaining high tariffs could lead to significant job losses in China, estimating potential cuts of up to 10 million jobs.

Mexico, which plays a key role in the global energy trade and has infrastructure connected to US ethane pipelines and storage, may also see indirect effects from the policy shift, particularly in the logistics and petrochemical sectors.