U.S. chemical firm finds Trump tariffs rendering it an 'absolute no-go zone'

US chemical industry now viewed as untouchable due to Trump's tariffs

In the heart of Hamburg, Germany, Hobum Oleochemicals, a medium-sized chemical company, is reevaluating its growth strategy in the United States market. The company, which specializes in plant-based specialty chemicals like hardeners for epoxy resins and binders, has been hit hard by President Donald Trump's trade policies.

The US, once an attractive market, has become uncertain for Hobum Oleochemicals. The 15% tariff imposed on their products significantly increases the cost for American customers, a cost that the company must absorb. This, combined with the ongoing trade tensions and uncertainty, has led to more growth in the US market being unfeasible under the current conditions.

Arnold Mergell, the CEO of Hobum Oleochemicals, expresses his concern about a "latent death" of US business. He states that investing in the USA is currently not feasible due to a lack of reliability in the system. This sentiment is shared by Matthias Zachert, the CEO of Lanxess, another German chemical company with a strong US presence.

The US is the most important trading partner for the German chemical industry outside the EU, accounting for 7.4% of total German chemical exports. Fine and specialty chemicals, such as those produced by Hobum, accounted for 42% of this US export. However, the uncertainty caused by US tariffs has led to two difficult quarters for the industry.

Over 40% of member companies in the industry association VCI expect their competitiveness to decline due to tariffs. Hobum Oleochemicals, like many others, is looking for alternatives. While the exact competitors actively seeking alternatives in the USA are not specifically named, major European chemical companies with a strong US presence include BASF, Brenntag, and Lanxess.

Hobum Oleochemicals, however, faces unique challenges due to US tariffs. A relocation of production to the USA to avoid tariffs is ruled out by Mergell due to high initial investment costs and the fear of a leak of business secrets. Instead, the company is looking more towards Asia.

The uncertainty also affects established business. A promising project with a US automotive supplier in the Detroit area, which could have resulted in a significant increase in turnover for Hobum, is on hold due to political uncertainty. It takes years to integrate a new product into established customer recipes, and US customers may be looking for alternatives due to Hobum's sudden increase in price.

Despite these challenges, Hobum Oleochemicals wants to keep its existing US business stable. The US business, less than ten percent of the approximately 35 million euro turnover, is still considered important. The company is navigating these challenging times with resilience, hoping for a more stable and certain future.