Episode 1412: Think Tank: Trump’s trade war is driving new business models for chemicals
Update: 2025-12-05
Description
Since the US Liberation Day, chemical prices and margins have plummeted, while tariffs are also accelerating the end of existing globalised business models of trade. - Tariffs are altering decades of globalized trade patterns, pushing economies toward protectionism- Chemical prices and volumes have plummeted since Liberation Day on 2 April- Export-oriented business models under threat, particularly for US chemical companies- Average US tariffs surged from 2.4% to 28% before settling around 16.8%, the highest since 1935 during the Great Depression- Future strategy must focus on regional supply chains and production capabilities, reducing reliance on global exports- Rising geopolitical tensions and NATO uncertainties mean chemicals for defence could become a major growth area- Localized production will drive demand for recycling, acceptance of mass balance approach needed- Grupa Azoty Polyolefins bankruptcy shows vulnerability of European chemical projects in an oversupplied global market - Regionalization trend already accelerating companies like BASF touting local capacity as a competitive advantage amid tariff uncertainty- Expect consolidation into fewer, larger producers in Europe, while smaller players may shut down or transition to specialties/low carbon production
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