Europe’s paint industry is facing a major crisis that could have far-reaching consequences. The problem revolves around a key ingredient called titanium dioxide, a white powder used in making everything from paint and sunscreen to food coloring and plastics. Many European paint manufacturers rely on China to supply this crucial compound, but the European Union (EU) is considering placing heavy taxes on Chinese titanium dioxide imports, and the impact could be disastrous.

The Roots of the Problem

For years, Europe has been reducing its dependence on Russian natural gas, which has driven up energy costs across the continent. On top of that, Europe is struggling to keep up with the growing competitiveness of countries like China and the United States, both of which have managed to outpace European industries in many areas. Meanwhile, the U.S. is actively offering tax breaks to attract manufacturers, further hurting Europe’s industrial output.

This has led to what many are calling a “perfect storm” of economic challenges for European manufacturers, especially in energy-intensive industries like paint production. Energy prices are sky-high, European factories are shutting down, and now, a looming EU decision threatens to push the paint industry to the brink.

The Tariffs that Could Break Europe’s Paint Industry

The EU recently approved a 39.7% anti-dumping tax on Chinese titanium dioxide, which they accuse of being sold at unfairly low prices. While the tax has not yet been put into effect, it could soon become reality if EU member countries approve it. This would mean European paint companies would be forced to pay much higher prices for titanium dioxide—or find alternative, more expensive suppliers.

Smaller paint manufacturers are especially worried. They say they won’t be able to survive such a huge price hike, with many potentially facing bankruptcy. Nicolas Dujardin, the Chief Operating Officer of a small French paint company called Oceinde, said that these new taxes could cause many companies to shut down. “If all these investigations result in such high taxes in Europe, then there are going to be some bankruptcies,” he warned.

The situation is just as alarming for larger companies. Executives from major paint producers like PPG, one of the biggest paint companies in the world, have also expressed concern. They say the tariffs are “disproportionate” and would hurt European companies’ ability to compete on the global stage. If these companies can’t afford the higher prices for titanium dioxide, they might have no choice but to relocate their production outside the EU to countries where materials are cheaper.

The Domino Effect: Job Cuts and Relocation

If these tariffs go through, the impact won’t just be on paint prices. It will also ripple through the job market. Many manufacturers will have no choice but to cut jobs to stay afloat. Finnish company Teknos has already said it would have to raise prices if Chinese titanium dioxide becomes too expensive, which could hurt sales and lead to job losses.

Paula Salastie, the CEO of Teknos, explained that the company is keeping a close watch on the situation. “If we’re unable to sell as much as we were expecting, then we need to cut jobs,” she said. This concern isn’t limited to Finland; paint companies across Europe are facing the same harsh reality.

China’s Growing Control Over the Market

Part of the reason Europe is in such a difficult position is that China has come to dominate the global market for titanium dioxide. In 2008, China’s share of the market was just 29%. Today, it produces over 83% of the world’s titanium dioxide, with 6.1 million tons produced annually. Over the years, many European factories that once produced this material have shut down, leaving Europe dependent on Chinese imports.

Now, some European companies are calling for the EU to bring back domestic production of titanium dioxide, but that would take years and cost billions. Jeffrey Neuman, a legal expert with European titanium dioxide producer Tronox, says it’s a “fundamental industrial resilience question.” In other words, Europe needs to decide whether it can rebuild its own production to compete with China, or continue relying on imports and accept the risks.

A Competitive Edge for Non-EU Countries

One of the other major concerns is that countries outside the EU—like the UK and Turkey—could benefit from the new tariffs. These countries could produce paints more cheaply since they won’t be subject to the same taxes on Chinese titanium dioxide. European paint manufacturers fear they could lose out to their neighbors, who would have a competitive edge.

A Bleak Outlook for Europe’s Industry

The combination of high energy prices, tough competition from China and the U.S., and the potential for crippling tariffs has put European industries in a tough spot. Over the past two years, European industrial output has already dropped significantly. The lack of cheap Russian natural gas and escalating trade tensions have only worsened the situation.

Russian President Vladimir Putin even predicted this back in 2022, saying the EU’s decision to stop buying Russian energy would be “suicidal” for European industries. He warned that Europe’s competitiveness could be permanently damaged, and now, with the new titanium dioxide tariffs on the horizon, that warning seems more real than ever.

In short, Europe’s paint industry—and many others—are bracing for a rough ride ahead. Whether the EU chooses to implement the tariffs or backtrack under pressure remains to be seen, but one thing is clear: the future of European manufacturing is hanging in the balance.