Trump’s tariffs threaten to choke European chemicals recovery

Written by Patricia Weiss, Christophe Settz and Oliver D v

Frankfurt/Hamburg (Reuters) -chemical producers in Europhy are facing fresh turmoil where American import tariffs are disrupted by global trade, pushing customers to delay requests and strike demand in a sector that struggles to recover from the energy crisis in the 2022 region.

It was the fourth largest export sector in the European Union after machines, cars and pharmaceutical preparations, struggling in recent years with the high costs of production after the prices of gas and energy increased after Russia’s invasion of Ukraine.

The slow demand due to conflicts in the main industries led some companies in the 655 billion euros sector (767 billion dollars) to close sites and reduce jobs to save costs.

The US import tariff, which is at least 15 % on the goods of the European Union, has struck many major customers in the industry, including in the car sectors, machinery and consumer goods. Global car manufacturers have seized billions of dollars in losses due to the damage to president Donald Trump’s trade war.

The third quarter profits in European chemical companies are expected to decrease by 5 %, after a decrease of 22 % in the second quarter, according to LSEG data.

“Since the energy crisis, we have been hoping for a continuous recovery in folders and margins in the European chemical sector,” said Thomas Schult Furock, an analyst at Metasler,.

He said that the customs tariff, price pressure and margin due to the harsh Asian competition at home and other places made a “very poisonous mixture now.”

The largest players in the industry – especially Basf (Bas.de), Brenntag (BNR.DE), and Lanxess (LXS.DE) – are somewhat protected from direct imports due to their strong presence in the United States but is still affected by cautious customer behavior.

Customers delay the requests, causing companies that make chemicals used in everything from mattresses and auto parts to chew gum to clear or adjust annual expectations in recent weeks.

BASF, the world’s largest chemical manufacturer, reduced its full expectations in July. The German group said that some customers were submitting requests just weeks ago – a decrease from three to four usual months – due to caution against the global economy in the short term.

يحذر آخرون ، مثل الرئيس التنفيذي لشركة Brenntag Christian Kohlpaintner ، من أن المواد الكيميائية الأرخص من الصين يمكن أن تغمر السوق الأوروبية إذا فشل المنافسون هناك الصادرات من الولايات المتحدة ، لأنهم يواجهون زيادة محتملة في الرسوم إذا فشل بكين وواشنطن في التوصل إلى صفقة قبل انتهاء صلاحية تعريفة التعريفة في 10 نوفمبر.