A Fresh Coat of Trouble: Paint Producers Push Back Against EU Tariffs

The European Union’s decision to slap tariffs of up to 39.7% on Chinese titanium dioxide has left Europe’s paint industry in a sticky situation as reported here in the FT. Paint makers are worried these heavy-duty measures might put the final coat on some businesses, leading to bankruptcies and factory closures. As the industry tries to navigate this murky trade dispute, the stakes couldn’t be higher and cannot be glossed over.

Titanium dioxide (TiO2) is the key ingredient that gives paints their vibrant colours—especially white. But with the EU's import tariffs raising the price of this vital pigment, producers fear the increased costs will be splashed onto consumers, pushing up prices and brushing off demand. Nicolas Dujardin, COO of French paint maker Océinde, warned that this tariff “is a question of survival” for smaller companies, which may not have the tools to handle the price hike.

The EU's anti-dumping measures aim to protect European producers from being painted into a corner by China's massive TiO2 output, which has ballooned in recent years. Tronox, a European titanium dioxide producer, argues that these tariffs are needed to level the playing field and prevent further damage from China’s overproduction. But paint manufacturers see it differently—they believe these duties will cause bigger problems, potentially leaving them out to dry.

For larger manufacturers, like Finland’s Teknos, the tariffs mean more than just higher costs. With the price of doing business in the EU staining their bottom line, some companies are considering moving production elsewhere to brush off the impact. Teknos has already hinted that future investments may go outside Europe if the situation doesn’t improve.

Meanwhile, Europe’s largest paint companies, like Akzo Nobel, are feeling the pressure, too. Chief Executive Gregoire Poux-Guillaume recently warned that rising raw material costs could lead to price increases for consumers. After all, as he said, "there’s no free brushstroke when it comes to higher tariffs.”

With the industry waiting to see if these tariffs will be confirmed in January, the next few months will be crucial. Will European paint producers be able to weather the storm, or will these tariffs leave them splattered? One thing’s clear: this trade spat has turned into a colorful debate with much more than just paint at stake.

Glossary of Key Economic Terms:

• Anti-dumping: A trade policy designed to prevent foreign products from being sold below fair market value, protecting domestic industries.
• Competitiveness: The ability of a business or industry to compete effectively in the market, often influenced by costs and innovation.
• Inflation: The rise in general prices over time, reducing the purchasing power of money.
• Production capacity: The maximum amount a company or sector can produce based on current resources and technologies.
• Protectionism: Economic policies that seek to protect domestic industries from foreign competition through measures like import tariffs and import quotas.
• Tariff: A tax imposed on imported goods to make them more expensive and less competitive with local products.
• Trade barriers: Government-imposed restrictions such as tariffs or quotas that limit international trade.

Retrieval Questions for A-Level Students:

1. What concerns are painted by the EU’s tariffs on Chinese titanium dioxide for European producers?
2. How might these tariffs brush up against the European paint industry in the long term?
3. What is Tronox’s argument for keeping the tariffs in the mix?
4. What splashes of broader economic impact could result from these anti-dumping measures?
5. How could the increased costs affect European consumers and stir up paint production costs?