Europe’s Chemical Exports in Crisis as Trump’s Trade War Escalates

A laboratory staff member takes a sample using a pipeline in the lab /Source-Reuters

Europe’s chemical industry is facing another major crisis as U.S. import tariffs introduced by Donald Trump threaten to choke its recovery. The sector, already hit hard by high energy prices and weak demand, is now struggling with slower orders, rising uncertainty, and stronger global competition.

The European chemical industry is the EU’s fourth-biggest exporter after machinery, automotive, and pharmaceuticals. Valued at around €655 billion ($767 billion), it plays a vital role in global supply chains by producing materials that go into cars, mattresses, solar panels, paints, and even chewing gum.

From Energy Crisis to Trade War

After Russia’s invasion of Ukraine in 2022, Europe’s chemicals sector was already under heavy pressure due to soaring gas and electricity costs. Many companies were forced to cut jobs and close production sites. Just when the industry hoped for recovery, Trump’s fresh 15% U.S. tariffs on EU imports added new obstacles.

These tariffs are hitting European chemicals indirectly because they affect key customer industries such as automotive, machinery, and consumer goods. Global automakers have already reported billions in losses during Trump’s ongoing trade war.

Profits Plunge and Orders Shrink

According to LSEG data, third-quarter earnings at European chemical companies are expected to fall by 5%, after an earlier 22% drop. BASF, the world’s largest chemical maker, recently lowered its full-year outlook, noting that many customers are now placing short-term orders, just weeks in advance instead of months.

Other companies like Brenntag and Lanxess are somewhat shielded thanks to their U.S. presence. Still, they face slower orders as customers hesitate to commit. Akzo Nobel and Wacker Chemie both cut their profit forecasts recently, blaming weak demand, destocking, and the added headache of a weak U.S. dollar hurting euro-based revenues.

The China Factor

Another looming threat comes from China. Industry leaders, including Brenntag’s CEO Christian Kohlpaintner, warn that Chinese producers could redirect chemical exports to Europe if the U.S.-China tariff truce expires on November 10. This could trigger a flood of cheap Chinese chemicals into Europe, putting even more pressure on local companies.

Smaller Companies Hit the Hardest

While chemical giants may survive thanks to global networks, smaller family-owned businesses are suffering. Hobum Oleochemicals in Hamburg recently lost a U.S. client because tariffs made deals too risky. CEO Arnold Mergell summed up the challenge:

“There’s no longer any reliability. And that’s total poison for projects and investments.”

What’s Next for Europe’s Chemicals?

In 2024, the EU exported nearly €40 billion worth of chemicals to the U.S., slightly more than in 2023. But experts warn that Europe may no longer remain a leading chemical exporter in the coming years, as high costs and political uncertainty push production elsewhere.

Lanxess CEO Matthias Zachert hopes demand will stabilize by the end of 2025, though he admits the near future looks tough. Analysts predict real improvement may only arrive in 2026, if global trade tensions ease.

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