The clock is ticking for Europe's chemical industry

ON 1 August, the United States imposed a 15% tariff on most European chemical imports. It caught some off guard. However, for many in the industry, it was just another warning sign: Europe’s chemical sector is under serious pressure — and time is running out to turn things around.

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The challenges go far beyond trade. For years, Europe's chemical industry has been weighed down by sky-high energy costs, complex regulations, and growing competition from Asia. The US tariffs didn't start the crisis — they simply added to the long list of pressures driving Europe's steady decline.

Europe is losing its competitive edge

To understand Europe's current vulnerability, it's important to look beyond short-term trade tensions and examine the deeper forces driving the region's decline. A combination of high energy costs, slow regulatory processes, and rising global competition is steadily undermining Europe's position in the global chemical market.

High energy costs

High energy prices remain a major weakness. Since 2022, European manufacturers have paid up to seven times more for natural gas than US producers. Electricity prices in Germany and France are more than double those in places like Texas or eastern China. For an industry heavily reliant on power, that's a critical disadvantage.

Europe's energy transition also adds yet another layer of pressure. As Europe accelerates its push toward net-zero, chemical manufacturers are being asked to cut emissions rapidly. Meeting these goals typically requires costly upgrades to plants, investment in new technologies, and rising compliance costs.

These regulatory demands have the potential to push firms to shut down or relocate production abroad — accelerating industry consolidation and further eroding Europe's manufacturing foundation.

Regulatory delays

Bureaucratic delays make things worse. Under the EU's REACH system, it can take up to four years to get a new chemical approved — slowed by extensive testing and documentation requirements.