Tariffs and Trade Wars with Joseph Chang and Al Greenwood of ICIS - Ep. 213

Tariffs are shaking up the global chemical industry this year, creating uncertainty and shifting longstanding trade routes in unexpected ways. Victoria Meyer is joined by Joseph Chang and Al Greenwood of ICIS Chemical Business to break down the latest round of tariffs, including the dramatic 145% rate on Chinese imports and the sweeping, if temporary, 10% baseline affecting nearly every other country. They analyze how chemical markets from the US to Europe and Asia are being impacted, exploring falling product prices, disrupted supply chains, and the broader economic pressures facing manufacturers and end users alike. 

 

With insights into policy-driven chaos, shifting sourcing strategies, and the growing ripple effects on sectors like housing and automotive, this episode highlights why strategic scenario planning, supply chain transparency, and adaptability are more critical than ever for chemical leaders.
  

Get ready for an in-depth look at these topics this week: 

• Exploring the 2025 tariff policies and how they are reshaping chemical trade flows 
• The economic ripple effects of the tariff policies 
• Supply chain resilience and why chemical companies must map their entire supply chains 
• Energy market dynamics: what is benefitting US chemical producers and what are the challenges 
• Strategic planning in uncertainty and navigating the 90-day tariff pause 

Killer Quote: "Look at your supply chains. Which products are you getting from Vietnam? Which products are you getting from lower tariff countries? And see where is the most advantageous supplier with the tariffs, and also look at product substitution... You have to be cognizant, not just of your supplies, but also your products. Which products could be affected by influx of displaced shipments?" - Al Greenwood 

 

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Creators and Guests

Host

Victoria Meyer

Host of The Chemical Show; founder and President of Progressio Global

What is The Chemical Show: Where Leaders Talk Business?

Looking to lead, grow, and stay ahead in the trillion-dollar global chemical industry? The Chemical Show - the #1 business podcast for the chemical industry - is your go-to resource for leadership insights, business strategies, and real-world lessons from the executives shaping the future of chemicals. Grow your knowledge, your network, and your impact.

Each week, you'll hear from executives from across the industry - from Fortune 50 to midsize to startups. You’ll hear how they're tacking today's challenges and opportunities, their origin story (what got them here!), how you can take and apply these lessons and insights to your own business and career.

We talk:
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Founder and host Victoria King Meyer is an expert interviewer - who brings out the best in each guest. She gained her industry experience at leading companies, including Shell, LyondellBasell and Clariant. Today, she is a high-performance coach and advisor to business leaders in chemicals and energy, as well as the host of The Chemical Show podcast, and founder of The Chemical Summit.

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Welcome to The Chemical Show, the
podcast where Chemical means business.

I'm your host, Victoria Meyer,
bringing you stories and insights

from leaders driving innovation and
growth across the chemical industry.

Each week we explore key trends,
real world challenges, and the

strategies that make an impact.

Let's get started.

Victoria: Welcome back to The Chemical
Show Where Chemical Means business.

Today we are focusing on tariffs.

Talking about the current
state of play and what chemical

leaders should be expecting.

So as you guys already know,
2025 has been a roller coaster.

I think we thought maybe that it was gonna
be a little bit better than prior years.

Who knows?

However, I.

There's been a lot of movement both
at the administrative levels and we've

looked at what's going on in the US but
also globally, with executive orders,

shifting, agency positions, continued
geopolitical movement and shifts.

And currently we seem to be
in a state of tariffs on.

Everything.

Although at the time that we're recording
this here at the end of April, we're

in a 90 day stay on most of the tariffs.

And and my guests today are
gonna talk a little bit more

about that, and what that means.

Obviously as chemical leaders, you know
that we're living in a global market.

There's a lot of influence, tariffs.

And shipping and supply chains all have
significant influences on the market.

So we're gonna talk about that and more.

Today I've got Joseph Chang, who
is the global editor of ICIS,

chemical Business and Al Greenwood,
who's the Deputy News Editor.

So these guys report on the trends in
the chemical industry analyzing drivers

of the chemical prices worldwide.

Looking at feedstocks and price
development, supply demand,

project activity m and a and more.

Oh, and the and more.

Today is tariffs.

So Joe and Al, welcome
to the Chemical Show.

Joe: Thank you.

Thank.

Thank you Victoria.

Victoria: Yeah, so let's just
start with your origin stories.

'cause how did you get engaged
and start writing on chemical

news and chemical markets?

Joe, I'm gonna start with you.

Joe: I started, um, with a, a publication
called Chemical Market Reporter.

That was eventually bought out
by Rex Rex, our current company.

Uh, it was re Elsevier at the time,
but yeah, I started in 1997, I believe.

So 28 years ago I saw an ad in
the paper it said financial editor

wanted, and that's, I graduated with
a finance degree from NYU and I.

And I was like, oh, I can always write.

So this seemed very intriguing.

I had no idea it was a
chemical publication.

They gave me the job on the spot.

They said you could start right away.

I said, alright, let's,
let's, let's give it a shot.

And you really learned on the job.

But that was, uh, 28 years ago.

And, uh, yeah, we've been through so
many cycles and, and developments.

It's, it's been an exciting ride so far.

Victoria: Yeah.

That's wild.

And did you think that you would use
your finance degree to report on this?

Is this where you anticipated going?

Joe: Oh, I don't think anyone thought that
they would end up in a chemical magazine.

Yeah.

But, it did prove very useful,
especially going through earnings

reports, talking to executives
about m and a, financial strategy.

It, it is, uh, yeah.

So it's been very, very, uh, very
useful and I'm glad I could put it

to use and actually be able to, use
that part, uh, to, to, to bring

readers, a better picture of what's
going on in the financial markets.

Got it.

Al: I

Victoria: love it.

Al: Al, how about you?

Well, I actually started, uh, with a,
uh, chemistry background in college.

I, uh, initially majored in biochemistry,
loved reading about chemistry,

but I kept dropping glassware.

So I thought, you know, if I like reading
about chemistry, switched to journalism,

become a, uh, reporter or an edit, you
know, science, journals, go back route.

But got ink in my blood,
became a newspaper reporter.

So that stuck for about 10 years.

Then in 2007 the opportunity
opened at ICIS, so was finally

able to put the two together.

So that's what I've been doing since.

That's very cool.

Victoria: Very, very cool.

And let's talk really briefly
about ICIS, chemical business.

So I'm, people may not be fully aware
of that, so can you guys just talk about

what you do and what the publication is?

Joe: Sure.

So ICIS chemical business, so weekly,
it's a weekly magazine, digital

magazine, gets published every Friday
at the end of the week, and it covers

all the major developments that, that
are happening in the chemical sector.

And it's part of ICIS news,
so the broader news offering.

so we kind of, uh, aggregate,
the important development.

So I'm also part of the
new team and we, we.

Report regularly, online.

Victoria: Awesome.

Cool.

And I know, uh, you guys, you and
some of your other colleagues, not

necessarily in the news business, provide
a lot of, content both on LinkedIn

and on your website and elsewhere.

I think people, can see you and
in fact, Joe and Al, I, you know,

when we got introduced I was like,
I didn't know you, but I'm like,

but I've seen your name everywhere.

So it's nice to, to get names and
faces and voices all put together.

so let's just talk tariffs.

What the heck is the current
state and how did we get here?

Al: Trump has been talking about,
uh, tariffs throughout his, campaign.

It's been a, key part of his economic
policy to, bring back manufacturing.

Spring to the United States,
reduced the, goods deficit.

So during his campaign, he
talked about reciprocal tariffs.

He talked about, uh, baseline tariffs.

So that's what he com campaigned on.

That's what we're getting.

Uh, so there's.

If you followed his campaign,
there's no surprises.

I guess it's just how quickly and
the magnitude, we weren't expecting

145% tariffs on Chinese imports.

Yeah.

Victoria: And, and these are, and when
we look at what's going on, these are

re quote unquote reciprocal tariffs.

Which, you know, I've seen a bit
about how they were calculated.

You know, was it a scientific calculation?

I don't know.

I mean, what are you
guys seeing and hearing?

So,

Joe: yeah.

It's, it's called the reciprocal
tariffs, but in no way, you know,

if you look at this, in no way
are these reciprocal at all.

They're not based on, on the tariff
levels of other countries or even the,

the non tariff, barriers that the US
Trade representative was analyzing.

yeah, it is a US trade deficit
divided by the uS imports

from that particular country.

You took that, that percentage
and you just divided it by half.

And you, that's how you came up with
customized levels on the country,

uh, with the baseline of 10%.

So 10% is the minimum.

And as you mentioned, Victoria,
we do have this, 98 pause

that started, uh, in early.

that brings everyone to the
baseline of 10%, with the exception

of China, which is at 145%.

And also there are some exemptions
for, uh, Mexico and Canada.

Victoria: Yeah.

So everybody's at 10% chi except for China
at one 145%, which feels a little crazy.

What have you guys been seeing
as the response to this?

Both, I guess, inside the chemical
industry, but when we look more broadly,

at what's going on around the globe?

Al: right.

Well, we've seen, uh,
globally, prices fall.

Uh, part of that is because
of the decline in oil prices.

Chemical prices tend to
rise and fall with oil.

We've seen oil decline on the
one hand, expectations of OPEC

plus increasing production.

Two oil prices are declining because
there are concerns about demand.

Uh, so when you, whatever the
reasons for oil prices declining

when they fall, chemical prices fall.

But in addition, uh, these, massive
tariffs that the US and China have imposed

on each other, they act as embargoes.

So all of the, uh, chemicals.

More importantly, the end products, that
the US and China once exported to each

other, those have to be redirected.

So especially in Asia, we're
seeing, uh, Asian, producers,

being flooded with supply.

So that's, contributing
to, price declines.

And we're also seeing that in Europe,
in the United States, we've seen some.

Initial, declines for our,
building block chemicals, but

we're waiting to see if we're going
to start seeing price increases.

RPM International held its, earnings
call right after, April 2nd.

The tariff announcements, it's
preparing for price increases.

In addition, polyethylene terif phthalate.

PET producers have been pushing for
price increases because their, catalyst

antimony, China is restricting shipments.

, so that's caused antimony
prices to increase.

So the producers are pushing for higher
prices to offset those cost increases.

What remains to be seen is.

Whether us producers, pricing power
to raise price, uh, we're gonna have

to look, but there's talks about
that in the United States and the

rest of the world falling prices.

Joe: If I can just add, yeah, the US is
pretty self-sufficient in olefins and

derivatives, so you know, there's not
gonna be that much of an impact there.

And if you look at the, the China trade,
it's mostly outbound in terms of us, uh,

ethylene and derivatives in particular.

But, , on the import side, you,
the US imports a lot of aromatics.

Uh, specifically from South Korea, again,
you have that 10%, tariff there, uh,

universal tariff, but, uh, the initial
tariff level on South Korea was 25%.

Uh, the US also imports aromatics
from the eu and they, which had a 20%

tariff before that was, lower during
the pause and specifically one big

impact on the US market, uh, is on MDI.

So MDI is, that goes into polyurethane.

So the US imported more than 50% of its
imports of MDI were from China, but I.

Obviously with 145% tariff, tho those
shipments have been cut to zero.

So that, that is certainly gonna
impact, the MDI market in particular.

But, uh, the real risk to the
US chemical industry is for

exports, exports of chemicals.

The US chemical sector is, uh,
has a trade surplus of over $30

billion, with the rest of the world.

And.

Very exposed to retaliatory tariffs.

So we're, we're seeing that, uh,
from China, US exports quite a

bit of polyethylene to China.

That is under, under 125%, tariffs.

So this is gonna be, uh, very difficult.

All these trade flows, as Al
mentioned, they're gonna have to shift.

And you do see product being
redirected to Southeast Asia.

Victoria: I think a couple points on that.

Number one, I.

Uh, you know, I think it's hard to,
given the, the amount of construction,

that China has had, certainly in
some of the polymer products, it's

hard to imagine that they're still
importing that much polyethylene.

On the other hand, we also know that
the US built a lot of its most recent

developments for and export market.

Do you guys see, I, you know, I
think we saw earlier in the 2020s

a bit of a shimmying and shifting.

So instead of, you know, when tariffs
come, instead of product going,

let's just use China, for example,
going back and forth directly between

China, it'll get redirected to another
route and then eventually making

its way into the US or elsewhere.

Do you see that happening again?

Are we, Gearing up for a redirecting
where trade routes just simply start

shifting in order to avoid tariffs,
is that, is that what's gonna happen?

Is that doable?

Al: Which for me short answer is yes.

We're already, uh, seeing it because we're
seeing China redirecting, especially

the end products, to Southeast Asia.

We've had, auto producers, tell
our, pricing editors in Asia that.

They're, seeing an influx of
Chinese exports that would,

normally go to the United States,
now going to Southeast Asia.

So we are, uh, seeing supply
chains, being rearranged.

And of course, US producers are going to
have to look at their own supply chains.

To see, if they could
find another supplier.

Again, think about that antimony,
what other, products could

become, susceptible to tariffs?

And also can they find substitutes?

So we're going to see, supply
chains, rearrange, we're gonna see,

product substitution when possible
and if those fail, if they have

the pricing power, higher prices.

But yes, we're going to definitely
see, supply chains rearrange.

We're already seeing it have, yeah.

Victoria: What effect
does this have on Europe?

You know, so I think about Europe.

Over the past few years and, and
just let's take the last, you know,

12 to 18 months, we're seeing, lots
of reports of assets shutting down.

They're of course, under a certain amount
of, or have been under some distress

because of this compression between
both their sustainability policies.

And carbon reduction goals and policies
that have been put in place as well

as, just sheer economics, right?

Older assets, perhaps
less economical energies.

Had a, had a role to play,
in the economics there.

And, you know, what do you, how
does this tariff situation, how

does this reshuffling affect that?

Or maybe what some of those other
decisions that have already been made.

Joe: Yeah, Victoria,
it's really interesting.

I mean, Europe is undergoing a
massive restructuring and we, you

know, as you mentioned, we have
seen a massive amount of shutdowns.

Yeah, shutdowns announced.

Shutdowns, even product reviews, asset
reviews, this is, uh, due to competitive

pressures that are coming, not just from
the US but the Middle East and China.

A lot of, uh, a lot of cheap
capacity and product coming on.

But, uh, yeah, the tariffs do make
things more difficult and much

more difficult because, especially
for the end products that, Europe

manufacturers and sends over to the us,
and including some chemicals as well.

This, this will pressure, European
industry even more, and also,

yeah, the, the same for the trade
flows from the US to, to Europe,

if those are put under tariff.

And the, the EU has already already rolled
out, a number of potential tariffs.

So they put that on a ni 90 day
pause as the US brought down their,

tariff levels to that 10% baseline.

So we'll have to see what happens, but
this can only make things more difficult

Overall, you're seeing an impact on
economic growth, lower economic growth.

Expected, not just in the us but
you're gonna see this all over

the world, most likely with this,
uh, with this kind of trade war.

Yeah.

That's developing.

And that's only gonna pressure the
European chemical industry more.

I guess the only positive
side is that, governments are

spending more on infrastructure.

They're, they've, uh, committed to
spend more on infrastructure and defense

because, they're really not looking to
the us, uh, to, to provide that, uh,

the defense level, and they have to
be more resilient and self-sufficient.

So that's one.

Kind of positive thing on
the growth side for Europe.

Victoria: Yeah, absolutely.

Part of the tariff story, certainly
in the US is this idea that we bring

more manufacturing into the us, which.

You know, you and I both know
it is not that easy, right?

Expanding a plant can be simple,
but it still takes a year or two, or

perhaps more depending on what it is.

Building a new site, um,
is much more expensive.

But I, I think about this investment,
whether it's in, as you mentioned,

Joe Europe on, some of their
infrastructure investment, us and

elsewhere on manufacturing investment.

Realistically, how long does
that take before we start really

seeing that spend take place?

'cause policy as easy
spend is more difficult.

Joe: Yeah.

And I think spending is even more
difficult when you don't know where

policy is gonna end up or you, you
have such uncertainty even on those,

the, the tariffs and the 90 day pause
and you know, hey, you know, do I

decide to build a plant in the us?

Uh, which, you know, I'm
gonna assume there's gonna be.

Major protective barriers are
the, the tariffs in place.

And then, oh, what if policies change?

What if, okay, maybe they strike a deal
with some of these countries and, uh,

yeah, it's, the tariff is no longer there.

Is it still worth to build in the, you
know, in this kind of, uh, environment,

uh, we're seeing companies kind of
pull back, pull back on investments,

on decisions in terms of m and a.

Hiring across all businesses.

This is very, very difficult
purchasing decisions.

It's really impacting
everything and really, um, yeah.

It's hard to make these, these big.

Investments.

Yeah.

And decisions when, uh, the environment
is so uncertain in terms of trade policy

and, even the macroeconomic picture,
which is related to tariffs as well.

Al: Yeah.

I needed to throw in, uh, in regards
to, chemical production moving to the

United States specifically, benzene.

Benzene is a byproduct.

It's a byproduct of cracking nafta.

It's a byproduct of refining.

Nobody is going to increase, refining
capacity just to make more benzene.

Nobody in the United States is
gonna start cracking more nafta.

Ethane propane is just
too, cost competitive.

So no matter how high the tariffs
get, nobody's building more

benzene in the United States.

So it's not going to happen.

If the tariffs stay high, it's, you know,
producers are gonna have to eat the cost.

Victoria: Well, and, and we
talked, previously about

just the effect of energy.

So energy and kind of feedstock
components as it relates to,

uh, to the chemical industry.

Right?

So propane and LPG, right?

So US is a huge exporter of that
to China and elsewhere, right?

Ethane, those things
are starting to shift.

Can you talk more about that al?

Al: Uh, yes.

I mean, we're already, the
ethane that the United States,

produces and exports to China.

China is not going to, be able
to competitively crack ethane with

these tariffs that ethane can't
move to another part of the world.

It has to stay in the United States.

So what we're going to see on.

The ethane side is, the US is
gonna have to either put it in

storage, increase ethane rejection.

That's about it.

Uh, so we're going to see, we could
see ethane prices reach a fuel

level, fuel value, excuse me.

In other words, ethane will cost
about as much as how much, what

its fuel value would be to burn it.

Uh, L PT is a little bit,
is that good for chemical

Victoria: producer?

Sorry, I'm gonna go, I'm
gonna jump back on that.

Al.

Is it gonna be a good news, bad news
that Ethane's gonna be so cheap?

Al: Well, it would be, that would
be one good thing for chemical

producers, because when ethane is
cheap, that's gonna help their margins.

But I think they would much rather.

See the demand equation increase
instead of the, uh, cost equation.

If they could one or the
other, but yeah, exactly.

You are going to see that would be
allowed chemical producers at ethylene

producers, to increase their margins.

Uh, OPG is a little bit different
because we're not the only exporter.

So there could be some.

Rearrangements, in other
words, us to China perhaps.

Would see, uh, qar, uh, I believe
big LLPG exporter will see a QAR

replace the United States, US replace
some of the, uh, Qatari, customers.

So there'll be some rearrangements,
but nonetheless, um, we are going

to see, utilization rates fall
for the PDH plants in China.

We're gonna see, OPG prices
fall with the United States.

Our dock space for our
terminals is already filled.

We've gotta get rid of this LPG.

We're expecting, LPG
prices, to also fall.

But, certainly what that thing,
we're going to see a, price drop

unless, there one, the, uh, Chinese
crackers can get an exemption.

Two, there's some things, they
can do with some swaps.

Um, I think if they, import the ethane
export, uh, Joe's more familiar with

this, uh, export the, derivatives, they
might be able to avoid the tariffs, but.

That's about all they
have to move around this.

bottom line is NGL prices are going
to fall because of these tariffs.

Joe: Yeah, and, and I'll just
add that it's not just in the

US but already we're seeing the
impact in South Korea and Japan.

So some of these US
LPG cargoes that we're.

Going to China, they've been
redirected and that has had, quite

a bit of an impact on the markets
in, in South Korea, Japan, with

those prices, falling pretty sharply.

So we've seen that already
in the past, uh, week or so.

Victoria: here's a question, do you
think individual consumers are really

starting to see the effect of tariffs.

Yet, or how and when.

And I guess I would say both
from a US perspective, but also

a global perspective, what do
you guys see from where you sit?

Joe: I think it may take a bit of
time for, for that impact to, to

be seen because, uh, you've seen
a front running of purchases.

So, so a number of companies, they've
already, built up inventory, anticipation

of tariffs and even consumers have
gone out and bought certain goods.

And you see that in the
automotive sector where I think

the light vehicle sales have.

gone up shot up to about over 17
million, units on an annualized

basis for the, for the last month.

So, you know, yeah, the, these
purchases are happening by

companies, by, individuals
already front loading purchases.

I think by the summertime you could
see a real, uh, impact, on that

and potentially on prices as well.

But it's, it's, it's also kind of a push
and pull where, of course, tariffs do,

do raise costs, and these importers,
they'll try to pass along the cost to.

But at the same time, if you get a
real slowdown in economic activity, a

real decline in consumer confidence,
it's gonna be very difficult to

push through major price increases.

And, and you know, so far we've seen
a deflationary impact, again, it,

yeah, you may, it may take time to,
for consumers to really feel the,

feel the pinch, uh, of the tariffs.

Victoria: Yeah.

And it also depends,
and, and I've had this.

Conversation just on a, personally
with some, some folks around, how deep

the margins are on certain products.

Like, you know, when, the tariffs
got announced on Vietnam, were at.

I don't know.

I wanna, let's just pick the
number a hundred percent.

I know that's not the right
number, but it was, oh, it was

Joe: 47%.

Yeah.

There we go.

Victoria: 47%.

Thank you.

Somebody knows the number.

And you know, Hey, is this
gonna affect my shoes?

Because, you know, Nike, others
get a lot of shoes from there.

I'm like, there is so much
stinking margin on those shoes.

It shouldn't affect your shoe price.

Now that doesn't mean retailers
won't try to pass it on, but.

I think there's this whole disconnect.

The margins obviously across the
chemical value chain are thinner because

those are raw materials getting used
into production for other things.

But, um, I guess that's just one of
the complicating factors is where in

the system these products come and go.

Joe: Yeah, and you can almost think
of it as, okay, it's gonna be a shared

cost between the, even the producer
that sends it over there, there's

gonna be some negotiation, the
importer itself and the consumer.

So it's almost a, if you think about
a third, a third, a third, uh, there's

gonna be some shared, shared pain there.

But say, because the product
comes from Vietnam, it's a under.

A 47% tariff that if that
particular number is reinstated,

does the product actually go up
by 47%, uh, at the retail level?

Uh, absolutely not,

Victoria: right?

Joe: No.

No.

you have to eat some of
that margin or a lot of it.

Victoria: so we're sitting here in
this waiting period, 90 days now down

to, I don't know, 70 days or whatever.

I'm not sure what our timeline is.

Well, actually, so two things.

Number one, what is the
end of that 90 day period?

So what do you guys
probably know is the answer?

Al: Uh, 90 days, I think.

Uh, April, may, sometime in

Victoria: end of June, right?

Summertime.

we know who we're asking to do our
calendar math from here on out, so.

So I guess while we're in this waiting
period, what can and should chemical

companies and others be doing to prepare?

Al: Well, I'll, uh, jump in.

One they've got, uh, I
guess covid all over again.

Look at your supply chains.

In other words, which products
are you, getting from Vietnam?

Which products are you getting
from, lower tariffs, countries.

And, see where is the, most
advantageous, supplier with the tariffs.

Uh, and also look
at, product substitution.

Uh, perhaps, one product that
you got from, one supplier is.

No longer competitive.

Is there a way to substitute it
and, also look at your, supply

chains for your end products,
because those are a little murkier.

So just like what we saw in, Vietnam
with these, uh, influx of, Chinese

material, coming in and products that
normally would go to the United States.

All of a sudden, you're getting
those end products into Vietnam, and

that's affecting, the, uh, domestic
producers of those end products.

They're purchasing, fewer
chemicals from Vietnamese producers.

So you have to be, cognizant not just of
your, supplies, but also your products.

Which products could be
affected by, uh, influx.

Of, displaced, uh, shipments.

Yeah.

And then, , finally look at some of
arcane feedstocks, catalysts, additives.

Things you don't really notice are
missing until they're gone, because

that's what happened with antimony.

And we've seen this over the
years with natural disasters.

When, for example, I think there
was a, plant that blew up in

Germany that, produced a, uh,
feedstock for like a nylon 12.

I think it was like one of the very few
plants in the world So this one chemical

caused outsized effects on supply chain.

So that's something else
to be, cognizant of.

And then finally, the self-help that
companies have been doing the past 18

months in this manufacturing downturn.

So optimization, cost cutting,
efficiency, et cetera.

Victoria: Joe, from your
perspective, what do you see?

What are you seeing that
companies can and should be doing?

I.

Joe: Well, I think, yeah, as Al mentioned
before, uh, I think companies will

look at all their sources of supply
and which countries, they come from.

So I'll just give an example for benzene.

Benzene is a big US import.

Uh, the US uses it to, for all
sorts of, purposes, but also

to make, tying to, to export.

But US gets a lot as mentioned
from South Korea, South Korea.

And again, if that 25% tariff, , goes
into place currently it's 10%,

that's gonna be a problem.

So, where else can the.

The US get their benzene.

Uh, well from the eu, EU I think is
another big source, but that could be

under a 24, 20% tariff as initially.

put in.

So you look at some of the other sources.

So if you look at the other regions,
India, Saudi Arabia, Brazil,

there are also sources there.

Uh, and, and that was originally
under a 10% tariff, not, you know, now

everyone is at that universal level,
but they were under much lower tariffs.

So you would go.

Potentially to see if there's additional
supply from those, uh, from producers

in the, in, in those areas, to try to
get, but yeah, I mean, companies have

been scenario planning, before tariffs
for, for quite some time, quite some time

since the Trump, presidency and since.

Since he was elected.

But I think in this, it's just
gotten so much more complicated with

the different levels of reciprocal
tariffs, with the pauses, the sectoral,

tariffs, all sorts of things.

So, uh, yeah, it's becoming much more
complicated, but companies just have to

go through all their scenarios in terms of
supply chain, sources of supply, and, uh,

as well as, other end markets as well.

Victoria: Yeah, I think
it's a great point.

And I think you say, you know, companies
have been doing scenario planning

and when I talk to some leaders,
they're like, oh, I planned for this.

I just didn't plan for
this order of magnitude.

Yeah.

And so that there's a new level
of complexity, , as a result.

Joe, I'm gonna, you know, one of the
things you talked about is, you know,

as you call it, the arcane products
or the products you don't think about.

Part of this is this whole.

Supply chain mapping and understanding,
you know, in every product, chemical

products elsewhere, you think that
your supply chain is diversified.

Oh, I've got three suppliers.

Oh.

But they're all going to
the same original supplier.

And that's where companies get burned
a little bit because they think

that they've, created security
supply because they're buying

from three different companies.

But as it turns out.

Those three different companies may be
relying on a single, uh, source point.

So that whole aspect of knowing your
value chain, understanding where

the implications really are, and
working your way around it is critical

So what have I not asked you guys that
we should be talking about as it relates

to tariffs, craziness going on in our
current chemical markets and more?

Joe: another part of this is
the impact on the end markets.

And in particular, you look at
housing, housing and automotive.

Those are two key end markets for the,
for the chemical sector and both, uh,

yeah, very much impacted by, by tariffs.

And the impact on interest rates as well.

So if you look at the housing
center sector, you are going

to see a lease signaled by the.

Administration, uh,
sectoral, tariffs on lumber.

Lumber is one of the components there.

You already have 25% tariffs
on steel and aluminum.

That's bringing up, uh,
housing costs, already.

And affordability is, is is
very much an issue here with

the, and the interest rates.

Interest rates have actually gone up.

They, they've gone up in the past,
uh, several weeks, quite rapidly.

So this is, uh, putting additional
pressure on home buyers and, and just

overall the, this, that sector will.

Likely continue to be under pressure,
and that's gonna, that's gonna

pressure chemical demand in turn.

And, and same for automotive.

Automotive, you have a series
of, uh, tariffs as well on,

on foreign made vehicles.

as well as some of the components,
automotive parts as well as

of course, steel and aluminum.

Big input costs.

Yeah, if you increase the.

The price of a vehicle.

If automakers have to increase prices, uh,
that's gonna automatically reduce demand.

Reduces demand.

You're gonna have a, uh, another
knock on effect for chemicals.

So those two key end markets are very,
very much affected by, by tariffs.

And they were already
struggling before all of this.

And just, you know, for two years,
over two years, we've had kind of an

industrial or manufacturing recession.

And you know, part of that
is the weak housing market.

And automotive has been,
uh, kind of lackluster, but.

This could potentially get
exacerbated with, with the tariffs.

And again, we'll have to see what
happens after this, 90 or now it's

a, yeah, less than 80 day pause.

But, uh, those are two
key sectors to watch.

Victoria: you know, we already
talked about people starting to.

I dunno, stocking up maybe is a
strong word, but certainly, um, moving

some purchase or purchase orders
ahead to try to moderate with this.

Do you anticipate this whipsaw that
we saw in, was it 2022 and 2023?

Right, so there was major
stocking and then destocking.

Have we gotten smarter about that?

Do you think

Joe: Yeah.

You know, Al was mentioning the Covid,
the Covid factor before, and how companies

really, you know, they, they started
double ordering, triple ordering, and you

saw the retail inventories really go up.

Yeah.

As 2022, I think the second quarter
of 2022, you saw extremely high levels

of inventories at the retail levels.

So the big box retailers, the Walmarts,
the Home Depots, the targets, yeah.

Tremendous increases.

And then.

You knew this was gonna re unwind.

This is gonna, you know, unwind and it was
gonna go all the way back to chemicals.

Chemicals and manufacturing and that.

And certainly we saw a massive
destocking, not just in, in retail

inventories, but that went all the way
down to chemicals, throughout 2023,

all of 2023, even some effects in 2024.

Uh, a really difficult period that
was exacerbated by Destocking.

So, you know what, what's
gonna happen this time?

You're seeing the same type of
effects where the inventory builds.

Ahead of the tariffs,
ahead of the tariffs.

Um, you know, companies are trying
to make the best calculation of

what future demand is gonna be,
but, you know, how do you do that?

In this type of scenario?

It's, I think it's very difficult.

You're gonna have some level
of higher inventory, some level

of risk associated with that.

You'd like to think, oh, they
learned their lesson from the

last time, you know, during covid.

But yeah, you'll have a similar but a
different circumstance here and, uh.

Yeah, we'll, we'll see.

We'll, we'll see what happens, but I
don't, I don't think you can completely

mitigate that risk just because, oh, this
is what happened during, during Covid.

So yeah, you run the risk
of, again, a demand slowdown

potentially emerging in the summer.

If, these inventories have been
built up, if consumers have done

some of their pre-buying, uh, yeah,
it could get a real malaise by

the time summertime rolls around.

Victoria: Good times guys.

Good times.

You guys are the bears
of good tidings today.

It sounds like the messenger.

So messengers.

So, you know, as we, as we wrap,
this has been a great conversation.

I really appreciate it.

Is, is there anything that we should
be watching, any key indicators,

anything you would say to people like,
you know, keep your eyes focused on

this as we go forward over the next
three months, six months and beyond.

Al: I've been looking at the, uh, yield
on the, tenure treasury note, because

that is, you know, we were expecting it,
to fall as the, tariffs are introduced

and we're seeing the opposite effect.

So that is going to.

Extend, some of the paint that we've
seen with the, slowdown and durable

goods, slowdown in automobiles,
slowdown in the housing market,

because, at least for, mortgages,

if those rise and fall with
those, uh, longer term, debt.

So the fact that it's going up is
not good for the chemical industry

because that played a big role in
the, uh, in that, manufacturing

recession, uh, that Joe mentioned.

So that's, one thing.

The other thing is of
course, what we talked about.

Restocking.

We saw automobile sales pick
up, right before the, tariffs.

So that's something else to look out
for is, how big of a pre-buy splurge

did we see and how will that play out?

And then finally, looking at some
of the forward looking, statistics.

The p.

I to see going to, see weaker demand
offset the ability for companies to

raise prices to offset the higher
costs caused by the, uh, tariffs.

Because at the end of the day,
buyers, consumers, customers really

don't care what your costs are.

If there's no demand, they're not
gonna buy what you're trying to sell.

Victoria: Well, that's helpful.

Well, Joe and Al, thank you
so much for joining me today.

This has been a great conversation.

Joe: Thank you so much, Victoria.

Hey, well

Victoria: thank you.

Thank you.

And thank you everyone
for joining us today.

Keep listening, keep following,
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