The recent tariff policy implemented by the United States is bringing significant uncertainty to the global polyurethane industry. Starting March 4, 2025, the U.S. will impose an additional ad valorem tariff of 20% on all polyurethane raw materials originating from China (including Hong Kong) based on the current tariffs (including anti-dumping and countervailing duties).

Impact on the global polyurethane market

Due to the inflation expectations caused by the additional tariffs, domestic polyurethane suppliers in the United States are attempting to reflect these inflation costs in their Q2 quotations. Moreover, the increase in tariffs may suppress the demand for polyurethane products from downstream industries such as automotive, construction, furniture, and home appliances.

Impact on major downstream industries

1. Automotive industry
As a key downstream industry of polyurethane, automobile manufacturing is facing the impact of rising prices of polyurethane raw materials. The production costs of car seats, interior panels, coatings, thermal insulation materials, and even composite materials used for automotive lightweighting have all increased accordingly. To address this challenge, American automakers are adopting a diversified supply chain strategy and increasing their reliance on domestic products and raw materials to ensure supply stability.
The use of polyurethane composite innovative materials helps to reduce the overall weight of vehicles and alleviate the pressure of rising metal costs. European and Asian automakers are also actively adopting localized production strategies to mitigate the impact of tariff increases and enhance supply chain resilience.

2. Construction Industry
Construction is another significant downstream industry for polyurethane, particularly in areas such as insulated panels and spray applications. Polyurethane is widely used from residential buildings to large commercial structures due to its excellent thermal insulation, durability, and versatility. However, the rising costs of polyether polyols and MDI are putting pressure on the construction sector, increasing the expenses of construction projects.

Innovative Transformation of Key Industry Players
Facing the pressure of additional tariffs and rising raw material costs, polyurethane companies are constantly seeking new development paths.

BASF: Capacity Expansion and Sustainable Development
BASF is expanding its capacity in Asia to counter cost pressures in Western markets and focusing on the development of sustainable products such as bio-based polyethers to better appeal to eco-conscious consumers. This move helps BASF maintain its competitiveness in sectors like automotive and construction, where environmental considerations are becoming increasingly prominent.

Covestro: Advancing Specialty Chemicals Business
Covestro is currently transforming its business towards high-value-added specialty chemicals to mitigate the impact of fluctuations in raw material costs. The company will focus on providing premium, high-performance polyurethane solutions to meet the high demand from the automotive industry and other downstream sectors for lightweight and energy-efficient materials.

Huntsman: Collaboration and Innovation
Huntsman is working with automotive and real estate companies to explore low-energy polyurethane solutions to alleviate the pressure from rising raw material costs. This includes providing lightweight, energy-saving foam systems for vehicles and insulation materials for buildings.

Dow: Digitalization and Circular Economy
Dow Chemical is enhancing its supply chain efficiency through digital transformation and reducing costs amidst tariff fluctuations. The company is also increasing its investment in polyurethane recycling and circular economy projects, providing sustainable material alternatives for industries such as automotive and construction, to reduce reliance on single raw materials and ensure production is not disrupted by price volatility.