China is killing Europe’s chemicals industry. Brussels wants to intervene.

The European Commission is developing new measures to protect the regional chemicals industry from a surge of low-cost Chinese imports that has pushed the sector toward an existential crisis. EU leaders are scheduled to discuss potential interventions, such as sectoral quotas and targeted tariffs, during a summit on June 18–19. This shift in trade policy comes as European manufacturers face declining production capacity and significant job losses due to a global supply glut and high domestic energy costs.

The European chemicals sector has seen a dramatic downturn, with industry group Cefic reporting a 10 percent loss in capacity and the elimination of 20,000 jobs over the last three years. Companies like Vynova, formerly Europe’s second-largest producer of polyvinyl chloride (PVC), are struggling to compete as China transitions from a net importer to a dominant global supplier. Vynova has already shuttered production at a Dutch facility and placed three other factories under legal restructuring, citing an inability to match Chinese prices.

Data highlights a stark divergence in global manufacturing trends; while China’s petrochemical capacity roughly doubled between 2010 and 2024, European capacity decreased by 14 percent. This shift has increased the bloc's reliance on foreign suppliers, with non-EU sources providing 31 percent of chemicals consumed in 2023, compared to 22 percent a decade prior. China alone has doubled its share of EU imports to 18 percent, fueled by excess production following the 2021 collapse of its domestic real estate bubble.

Beyond trade imbalances, European producers face severe structural disadvantages, including industrial electricity prices that are double those in the U.S. and China. Additionally, the EU Emissions Trading System imposes a carbon price of approximately €75 per ton of CO2, a cost burden not shared by many international competitors. To address these challenges, Brussels is considering aggressive trade defense mechanisms similar to those used in the steel sector, though industry leaders like Vynova’s Rudy Miller warn that the slow pace of EU policy implementation may come too late for many struggling firms.