London Talks Reverse “Monumentally Ill-Advised” Ethane Export Controls

Following high-level U.S.–China trade talks in London, Commerce Secretary Howard Lutnick announced that the United States will reverse recently imposed export controls on ethane shipments to China. The decision ends a short-lived but disruptive policy that, according to Philip Luck of the Center for Strategic and International Studies (CSIS), revealed deep flaws in U.S. economic statecraft.

“The ethane export controls represent everything wrong with contemporary U.S. economic statecraft: poor analysis, inadequate preparation, arbitrary implementation, and stubborn persistence in the face of obvious failure,” Luck wrote in a June 9 CSIS commentary updated following the London negotiations.

The Bureau of Industry and Security’s June 3 move to block three ethane cargoes disrupted a major trade flow representing nearly half of U.S. ethane exports. However, Luck noted that China was largely unfazed. “Even if U.S. ethane disappeared entirely tomorrow, China would lose at most 5–6 percent of its ethylene capacity in the short term,” he explained, citing China’s use of flexible cracker technology that allows easy substitution of feedstocks.

Rather than constraining China, the policy inflicted significant damage on U.S. producers. “Ethane prices have collapsed, domestic inventories are building, and loaded tankers are literally treading water off the coast of Houston,” Luck observed. He estimated losses of $2 million per day and warned that “with no other market able to absorb the volume,” U.S. companies were being forced to flare gas or reduce production.

Luck argued that the policy failed even minimal standards for strategic analysis. “The vulnerability analysis was superficial at best,” he wrote. “Policymakers simply looked at aggregate trade flows… and concluded this represented meaningful leverage.” In reality, he noted, “China’s ethane dependence was neither deep nor irreversible.”

He also criticized the absence of interagency review: “By all accounts, these ethane controls were implemented without any such process or analysis. If such a process had taken place, any number of agencies—not least the Department of Energy—could have told Commerce how monumentally ill-advised this idea was.”

Luck warned that the controls not only harmed domestic producers but also undermined U.S. credibility abroad. “Markets for energy… function on long-term contracts, massive infrastructure investments, and predictable regulatory frameworks,” he wrote. Imposing ad hoc restrictions, especially on a non-strategic commodity like ethane, “introduces a new element of political risk” into U.S. trade.

He further cautioned that such moves “poison the well,” alienating allies and partners: “European allies… now must wonder whether U.S. alternatives come with their own political strings attached.”

As Lutnick, Treasury Secretary Scott Bessent, and USTR Jamieson Greer negotiated with Chinese Vice Premier He Lifeng in London, they sought to contain the fallout of what Luck called “a strategic own goal.”

“Economic competition with China requires sophisticated, sustained, and strategically coherent policies,” Luck concluded. “The American people deserve better from their government than policies that inflict costs on domestic producers while generating no meaningful benefits.”

The rollback of the ethane restrictions may mitigate immediate losses, but analysts say the episode leaves lasting questions about U.S. policy formulation in an era of strategic economic rivalry.