Europe’s chemical industry is in free fall — America's could be next

Europe’s chemical industry is quietly unraveling, and Americans should be paying very close attention. What is happening across the Atlantic is not simply a story of industrial decline. It is a warning sign for the United States about what happens when overregulation collides with global competition, especially from China. If Washington does not act, the same pressures now hollowing out Europe’s chemical base could undermine America’s position as a global chemical producer over the next decade. After all, it is just as true in the United States as it is in Europe that excessive regulation combined with a flood of Chinese imports is a double hit few industries can withstand for long.

The numbers alone are staggering. A recent story in the Financial Times disclosed that investment in Europe’s chemicals sector fell more than 80% in 2025, collapsing from 1.9 million tons of new capacity in 2024 to just 0.3 million tons last year. At the same time, plant closures doubled. Since 2022, around 20,000 jobs have been directly affected, and 37 million tons of production capacity – representing ~9% of Europe’s chemical production capacity – have disappeared. What we are witnessing is the structural decline of Europe’s chemical manufacturing sector, which produces all the building blocks for modern life.

Industry leaders in Europe are clear about what is driving this decline: high energy prices, suffocating bureaucracy, aggressive regulations, and a flood of cheaper imports from China. Chemicals are among the most energy-intensive products in the economy, with energy accounting for a significant share of petrochemical production costs. Chinese producers benefit from access to discounted oil from sanctioned suppliers, in effect creating a parallel trading network that provides cheap feedstock for Chinese petrochemical production. This gives Chinese chemical manufacturers a structural cost advantage in global markets and allows them to undercut Western competitors that lack access to those cheaper feedstocks. When you add carbon pricing, painfully slow permitting, and a veritable maze of regulatory requirements tied to the EU’s net-zero agenda, it becomes clear why investment capital, and jobs, have gone elsewhere.

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The consequences reach far beyond chemical companies themselves. Chemicals are the building blocks of modern economies. As Marco Mensink, director-general of the European Chemical Industry Council, warned, "If you want a defense sector… an automotive sector, it’s totally dependent on chemicals supplying the materials." Europe is already 80% dependent on China for vitamins, and increasingly reliant on Chinese inputs for economic essentials. This dependence leaves Europe not only economically exposed but strategically vulnerable to China for the building blocks of its economy.

For Americans, the temptation is to see this as simply a problem of Europe’s own making. After all, the U.S. enjoys comparatively lower energy costs, abundant natural gas, and a more market-oriented approach to industrial policy. At Olin, we see that this sense of security is more fragile than people might expect. Many of the same pressures are already visible here: rising regulatory burdens, permitting delays for industrial projects, growing reliance on chemicals produced in China, and an uneven trade playing field. Recent Biden-era EPA rules pertaining to the Toxic Substances Control Act (TSCA), particularly around risk evaluation and unreasonable risk determinations, have significantly expanded federal authority in the chemical space, adding to the regulatory burden facing companies here at home. This, in turn, has threatened the domestic production of chemicals essential to economic growth in the United States. As recent Congressional testimony highlighted, as late as 2009, the United States was the global leader in chemical production. Yet today, China accounts for 50% of all global chemical sales, with the United States a distant second place. Without deliberate action, the U.S. could follow Europe down the same path, losing investment, capacity, and, most importantly, good-paying American jobs, one plant at a time.

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The recent closure of our epoxy plant in Brazil offers a telling illustration of this broader trend. While Brazil is not Europe, the logic is the same. And while Europe is experiencing this troubling dynamic at scale, U.S.-based producers are not immune to the same calculus. In recent years at Olin, we have had to close chemical capacities in our facilities in the United States, as well as in Europe and Asia, as global markets shifted. Other chemical companies have also taken similar steps as rising costs and uneven trade conditions reshape the industry.

All is not lost though. The United States still has a strategic advantage in chemical manufacturing. When it comes to resources, technology, safety, and our workforce, the United States is well placed to continue advancing in the chemical sector. At Olin we are committed to fostering this sector of the economy and onshoring chemical manufacturing so that we strengthen the United States’ economic and national security interests.

As U.S. policymakers ponder our direction moving forward, the lesson from Europe’s decline is not that environmental goals or worker protections should be abandoned. It is that policy choices have trade-offs, and ignoring competitiveness has real consequences. The dramatic decline of chemical manufacturing in Europe shows what happens when regulation races ahead of market realities and when governments underestimate how quickly global supply chains can shift. Once capacity is gone, it is extraordinarily difficult, time-consuming, and very expensive to rebuild.

If the United States wants to avoid becoming dependent on China for the chemicals that underpin defense, healthcare, agriculture, and advanced manufacturing, we need a coherent strategy now. That means faster permitting, predictable regulation, realistic climate policy timelines, and a serious approach to trade enforcement. It means recognizing chemicals as a strategic sector, not just another line item in environmental rulemaking. Europe is offering our nation a cautionary tale in real time. The question is whether America will learn from it or follow Europe down the path to job losses and Chinese dependency.