What Could Trump 2.0 Mean for China PVC Powder Industry?
Introduction: With Trump’s re-election and the Republican sweep of Congress, the market focus shifts to the policy trajectory of Trump 2.0. From his governance philosophy, negative impacts are expected on PVC flooring exports, while other areas might remain relatively unaffected. In 2025, the challenges facing the PVC industry are likely to stem primarily from internal supply-demand imbalances.
Impact on the PVC Market from Tariffs
Trump’s signature policy includes imposing tariffs. During his campaign, he proposed a 60% tariff on Chinese goods and 10% on imports from other countries. On November 25, Trump announced plans to levy an additional 25% tariff on goods from Mexico and Canada and an additional 10% tariff on Chinese imports from his first day in office.
The impact of U.S. tariffs on China’s PVC powder imports and exports is negligible. Chinese PVC exports primarily target India, Southeast Asia, Central Asia, and Africa. Although the U.S. is China’s largest import partner for PVC powder, the major import trade mode is processing trade with imported materials, with general trade volume being minimal.
However, tariffs may significantly impact PVC downstream products, particularly PVC flooring. Before Trump’s first term, China’s PVC flooring exports grew rapidly at an average annual rate of 30%, with the U.S. being the largest trade partner. After successive tariff increases starting in 2018, export growth slowed, turning negative by 2022. Many Chinese flooring enterprises relocated to Vietnam and other Southeast Asian countries. The dependence of China’s PVC flooring exports on the U.S. has steadily declined, with the share dropping from over 60% in 2018 to around 43% in 2023 and further in 2024. From January to October 2024, PVC flooring exports totaled 3,904.1kt, up 31.09% YoY.
With Trump 2.0, further tariff hikes are inevitable, presenting headwinds for PVC flooring exports. However, after adjustments in China’s PVC flooring sector, these impacts are expected to weaken over time.
Impact on the PVC Market from Energy Policies
Trump’s re-election introduces mixed implications for crude oil prices. On the bearish side, he supports easing the conflict and promoting traditional energy sources, which could drive oil prices lower. On the bullish side, Trump pledges to tighten sanctions on Iranian oil and increase support for Israel, potentially constraining global oil supply.
The impact on oil prices will likely depend on the sequence of policy implementation. During Trump’s first term, oil prices fluctuated between $40-75/bbl.
Crude oil price volatility can indirectly affect PVC, as ethylene-based PVC relies on oil-derived feedstocks. Ethylene-based PVC is expected to account for 26.14% of total PVC capacity in 2024. In addition, 2,000kt/a ethylene-based PVC units are planned to come online in 2025, so the proportion of ethylene-based PVC capacity may increase further. While the sensitivity of PVC to oil price changes is limited due to its multi-step production process, a significant drop in oil prices under Trump 2.0 could lower ethylene-based PVC costs, boost operating rates, and expedite new capacity launches, increasing supply pressures in China’s PVC market.
Impact on the PVC Market from Federal Reserve Policies
The Fed began its rate-cutting cycle in the second half of 2024, and this is expected to continue in 2025, providing a key macroeconomic driver for commodities, including PVC. However, Trump’s re-election could alter the pace of the Fed’s rate cuts. His policies of domestic tax cuts and external tariff increases could boost the U.S. economy and inflation, potentially raising interest rates and limiting the scope for rate cuts. This impact may manifest in 2026, leaving the Fed’s 2025 rate-cut trajectory largely unchanged. As a result, China’s commodity markets, including PVC, may continue to benefit from the Fed’s easing policy in the near term.
The advent of Trump 2.0 is expected to introduce certain headwinds to China’s economy, with the primary impact on the PVC market stemming from increased tariffs. However, China has prepared countermeasures, including anticipated fiscal and monetary easing in 2025, to mitigate U.S. pressures. For the PVC market, the more pressing challenge in 2025 will come from internal supply-demand imbalances.
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