2025 stands as a watershed year for transatlantic chemical trade, where shared climate ambitions collide with starkly different economic realities. Europe, once a cornerstone of global chemical production, is navigating an unprecedented crisis of deindustrialization fueled by energy costs and regulatory pressure. Meanwhile, North America is capitalizing on its resource advantages and technological agility to redefine its competitive edge. This transatlantic divide is not merely a regional story—it is reshaping the flows of chemicals, technology, and investment across the globe.
Europe’s Dual Crisis: Energy Shock and the CBAM Reckoning
The European chemical industry is confronting a perfect storm of challenges that have triggered a historic contraction. At the heart of the crisis is an energy cost disparity that has eroded its global competitiveness. In the wake of the Ukraine conflict, European natural gas prices remain three times higher than those in the United States, driving energy costs up by approximately 400% compared to pre-conflict levels . This cost burden has forced a wave of permanent plant closures: over 15 million metric tons of chemical capacity—spanning olefins, aromatics, and chlor-alkali sectors—have been earmarked for shutdown . Major players like Dow Chemical, INEOS, and Saudi Basic Industries Corporation (SABIC) have announced the closure of flagship facilities in Germany, the UK, and the Netherlands, including INEOS’ 650,000-ton phenol plant in Gladbeck, once the world’s largest .
Compounding the energy crisis is the imminent full implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM) in 2026. This landmark policy, designed to prevent "carbon leakage," will impose a carbon tariff on imports of high-emission goods, including key chemicals. For European producers, this internalizes a cost they can ill afford; for exporters to the EU, it is expected to add 5% to 10% to their overall costs . The combined impact is evident in trade figures: the EU’s chemicals trade surplus with China has evaporated, swinging from a €9.9 billion surplus in 2020 to a €9.6 billion deficit in 2024 . The European Plastics Industry Association warns that the sector is "on the brink," with its global market share plummeting from 22% in 2006 to just 12% in 2024 .
America’s Resurgence: Energy Advantage and Tech-Led Growth
Across the Atlantic, the United States is emerging as a relative winner in the reshuffled global order, buoyed by its abundant and affordable energy supplies. The shale gas revolution has given U.S. chemical producers a structural cost advantage, particularly in energy-intensive sectors like ethylene production. This advantage is translating into investment and growth: capital expenditures in American green chemicals and new energy materials are rising by 15% annually, with a focus on biobased materials and carbon capture, utilization, and storage (CCUS) technologies .
Beyond energy, the U.S. is doubling down on technological innovation to secure its leadership in high-value segments. American companies are at the forefront of developing next-generation biobased chemicals. For example, Dow Chemical has introduced a biobased polyolefin elastomer (POE) made from waste cooking oil and corn stover, which reduces CO₂ emissions by 39% compared to petroleum-based alternatives . Meanwhile, strategic collaborations are accelerating innovation cycles. The recent partnership between industry giant BASF and U.S.-based IFF to advance enzyme-driven biomaterials for cleaning and personal care products exemplifies how American biotech expertise is merging with global chemical manufacturing prowess to capture the $350 billion global green chemicals market .
A Transatlantic Response: Digitalization and Global Footprint Shifts
Faced with shared challenges of supply chain volatility and regulatory complexity, both European and American firms are converging on similar strategic responses, albeit with regional nuances.
The first is the urgent push toward supply chain digitalization. Industry leaders recognize that digital tools are no longer optional but essential for resilience. Companies like Dow and BASF are leveraging artificial intelligence for predictive maintenance and demand forecasting, while blockchain and digital twins are enhancing traceability—critical for complying with CBAM’s stringent carbon footprint reporting requirements . Collaborative digital platforms, such as the one developed by Eremaica (a joint venture of Bayer, BASF, and Dow), are integrating fragmented ERP systems to improve efficiency and serve long-tail customers more cost-effectively .
The second response is a strategic reconfiguration of global production footprints. European firms are increasingly "nearshoring" or "friendshoring" their capacity. BASF, for instance, is expanding its presence in the U.S. Gulf Coast, while others are investing in the Middle East, where cheap natural gas and proximity to Asian markets offer a competitive lifeline . American companies, meanwhile, are using their domestic base as a springboard to export high-value, low-carbon products to Asia and Latin America, capitalizing on the growing global demand for sustainable chemicals.
2025 Outlook: A Tale of Two Continents, One Industry
The outlook for transatlantic chemical trade in 2025 is one of divergence and adaptation. Europe is entering a painful but necessary period of consolidation, with its future competitiveness hinging on its ability to rapidly decarbonize and focus on niche, high-tech specialty chemicals where it retains a lead. Recovery, according to the European Chemical Industry Council, may not come until 2028 .
For North America, the moment is ripe to solidify its position as a global hub for affordable, innovative, and low-carbon chemicals. Its success will depend on maintaining its energy cost advantage, accelerating the commercialization of breakthrough green technologies, and navigating the geopolitical complexities of a fragmenting global trade environment.
Ultimately, 2025 is not just a year of crisis for European chemicals or opportunity for American ones. It is a year that underscores a fundamental truth: the future of global chemical trade will be defined not by scale or proximity to traditional markets, but by the ability to master three interconnected imperatives: decarbonization, technological innovation, and digital agility. For both sides of the Atlantic, the race to integrate these imperatives into their DNA is well underway.