EU Expands Trade Defenses to Chemicals, Plastics Amid Chinese Overcapacity

The European Union is extending its trade defense measures to cover chemical and plastic imports from China, moving beyond earlier actions targeting automobiles and steel. France and Italy have initiated steps to deploy safeguard mechanisms, with Germany expected to join. These measures aim to curb surging low-cost imports entering sectors ranging from packaging and automotive manufacturing to energy and construction.

Chemical and plastic import surge drives EU action

According to Reuters, EU member states are preparing formal requests for European Commission investigations into the application of “safeguard” procedures — distinct from anti-dumping duties — under EU trade law. Targeted products under consideration include polyethylene terephthalate (PET), epoxy resins, and fiberglass. Safeguards may be imposed when a sudden, significant increase in imports threatens domestic industry, without requiring proof of dumping or state subsidies. Potential tools include import quotas or temporary customs restrictions.

European Commission data shows that EU chemical imports from China reached €50.2 billion in 2025 — a 26% year-on-year increase — while EU chemical exports to China stood at €34.5 billion. In the same year, EU imports of plastic, rubber, and related products from China totaled €23.38 billion, against just €8.72 billion in exports. China accounted for 27.8% of the EU’s total external imports in this category. Organic chemical imports from China alone amounted to €34.1 billion.

Plastic production share collapses as trade deficit widens

Europe’s share of global plastic production has fallen from 22% in 2006 to 12% in 2024, according to Plastics Europe. China now accounts for 34.5% of worldwide output — nearly three times Europe’s current share. European plastic industry revenues declined from €457 billion in 2022 to €398 billion in 2024. For the third consecutive year, the EU has registered a net import position in plastic by volume.

Meanwhile, the EU’s goods trade deficit with China reached €359.8 billion in 2025, as EU imports from China rose 6.4% and EU exports to China fell 6.5%, per Eurostat.

Chemical sector under sustained pressure

The European Chemical Industry Council (Cefic) reported on 14 September that sector-wide capacity utilization remains at approximately 75%, below historical averages. Demand weakness and production declines persist across major industrial economies including Germany, Italy, and the Netherlands. European chemical exports dropped 6.3% in the first half of 2026, while imports fell 5.9%. Polymers and key organic chemicals ranked among the weakest-performing segments.

The European Commission attributes the sector’s declining competitiveness to high energy and raw material costs, weak demand, and global competition. It notes over 20 major production sites have been announced for closure within two years, entailing an estimated job loss of 10,000 to 20,000 positions. The EU has already lost at least 8–10% of its petrochemical cracking capacity over three years. The Commission warns further closures could reduce capacity by more than 20% relative to 2021 levels.

While large European chemical firms pursue layoffs and restructuring, the German Chemical Industry Association cautions that any safeguard measures must account for downstream supply chains dependent on these materials. At present, the EU’s initiative remains in the investigative phase, with no final determination yet made on which products or countries would be covered by potential restrictions.