How Trump’s New Tariffs Are Reshaping LPG and Base Oil Trading - Evicor AG

Under President Trump’s “Liberation Day” program, the United States introduced
wide-ranging tariffs and sanctions that are reshaping global energy trade. The measures,
which include a 10 percent baseline tariff and reciprocal country specific duties, directly
impact liquefied petroleum gas (LPG), base oils, and related commodities. For LPG, these
actions are redirecting trade flows, particularly away from the US–China corridor, and driving
regional price shifts. In base oils, the effect is concentrated in higher production costs and
supply chain disruptions, intensified by the lack of tariff exemptions. Together, these
developments are amplifying volatility across the energy trading sector and forcing market
participants to reassess their strategies.

Impact on LPG Trading
China, historically the second-largest LPG buyer of U.S. origin, is now pivoting toward
Middle Eastern and other suppliers after the imposition of steep tariffs. This shift is projected
to reduce China’s LPG demand by approximately 150,000 barrels per day in the second half
of 2025, realigning market dynamics.

Furthermore, China’s retaliatory tariffs, including an 84% levy on US propane and ethane,
threaten to undermine U.S. exports of these key petrochemical feedstocks. Ethane flows, in
particular, are at risk since almost half of US ethane exports go to China and are critical for
ethylene production. As U.S. LPG exports are rerouted to other regions (e.g., Europe,
Japan, India), downward pressure on US LPG prices may mount, disrupting revenues for
shale producers while benefiting buyers with alternative supply access (e.g., Middle East
exporters).

Looking forward, traders and companies should anticipate continued volatility in LPG pricing
and demand, particularly if supply chains shift favorably toward non-U.S. sources.
Diversifying export destinations and exploring alternate feedstock routes could mitigate risk,
and strategic partnerships in the Middle East, India, and Southeast Asia may become
increasingly critical.

Impact on Base Oil (Lubricants) Trading
Tariffs are also rippling through the lubricants industry, particularly impacting base oils, such
as Group III conventional stocks, and additive components. Tariff-related supply chain
disruptions are causing logistical delays and rising costs for U.S.-based lubricant
manufacturers.

Although the U.S. tariff policy includes relief for core energy commodities, base oils are
generally excluded, leaving the sector exposed to additional costs. For example,
JobbersWorld reports a 25% surcharge on most Canadian lubricants, compared to just 10%
on energy products, which further amplifies cost pressures for domestic producers. These
rising costs are compounded by logistical delays and operational challenges.

Anticipating market shifts, lubricants firms must reassess supplier networks, exploring
tariff-exempt jurisdictions and local production to contain costs. Innovation in additive
sourcing and potentially shifting toward alternative base oil grades could buffer margin
pressures. In the long run, investment in resilient supply chains and customized procurement
strategies will be key.

Taken together, Trump’s sweeping tariffs are reconfiguring global energy and petrochemical
value chains, drastically reducing Chinese reliance on US LPG and ethane, and raising
alarm among base oil producers facing rising input costs. Traders must stay agile: diversify
markets, source strategically, and continuously optimize supply chains to navigate this
rapidly evolving landscape.

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