2026 Chemical Industry Outlook: Cautiously Optimistic Despite Near-Term Headwinds

At the end of 2025, the chemical industry found itself navigating a complex economic landscape marked by cautious optimism. While uncertainty remains, recent policy shifts and global trends have provided a foundation for growth that could shape the sector’s trajectory in the coming years.

Economic Backdrop: Resilience Despite Uncertainty

The U.S. economy demonstrated resilience, buoyed by the passage of major tax legislation, deregulation efforts and a series of trade agreements. GDP growth is expected to come in at 1.9% in 2025, slightly below last year but stronger than mid-year projections. Looking ahead, 2026 promises modest acceleration to 2.0%.

Consumer spending has been a tale of two Americas. High-income households, benefiting from robust equity markets, have driven much of the growth, while middle- and lower-income consumers have tightened their belts amid rising prices and a softening labor market. Overall, spending grew 2.5% in 2025 but is projected to slow to 1.7% in 2026.

Business investment tells a similar story of contrasts. The surge in AI-driven infrastructure — particularly data centers — has fueled demand for semiconductors, electrical equipment and power generation. Yet, outside these sectors, high borrowing costs and tariff-related uncertainties have dampened enthusiasm for new projects.

Global Trends: Moderate Growth and Shifting Supply Chains

Globally, GDP expanded by 2.9% in 2025, with Asia-Pacific and emerging markets leading the charge. Industrial activity rebounded, growing 2.6% thanks to technology-driven investments and easing monetary policies. However, persistent trade tensions and geopolitical risks continue to reshape supply chains, pushing companies toward greater regionalization.

World trade volumes managed to grow despite tariff headwinds, aided by front-loaded activity early in the year and sustained demand from emerging economies. These dynamics have significant implications for chemical producers, who rely heavily on global trade flows.

Industrial Production: Uneven Recovery

Industrial production in the U.S. rose 1.1% in 2025, driven by early-year gains and strength in sectors such as data centers, aerospace and pharmaceuticals. Yet, tariff uncertainty and inventory buildups weighed on output for much of the year. The outlook for 2026 is subdued, with growth expected to slow to just 0.2%.

Manufacturing performance has been uneven. While industries tied to semiconductors and aircraft thrived, construction-related sectors — such as structural panels and appliances — lagged. Auto manufacturing, a key end-use market for chemicals, saw strong sales in 2025 at 16.2 million units, but this momentum is expected to ease in 2026, as affordability constraints persist.

Housing, another critical driver of chemical demand, remained constrained by high mortgage rates and building costs. Housing starts fell to 1.35 million in 2025 and are projected to remain flat in 2026.

Chemical Production: A Mixed Bag

The chemical industry mirrored these broader trends, as seen in ACC’s Economic Sentiment Index, which showed deteriorating conditions in Q3. U.S. chemical output grew just 0.7% in 2025, with gains in basic, specialty and agricultural chemicals offset by declines in consumer products. Specialty chemicals rebounded strongly, up 3.3%, while agricultural chemicals rose 4.0%. Conversely, plastic resins slipped 0.4%, and consumer chemicals fell 1.6%.

Looking ahead to 2026, volumes are expected to remain nearly flat, rising only 0.4%. Basic chemicals may see modest growth of 1.5%, but specialty chemicals are likely to stagnate, and consumer chemicals could decline further.

Globally, chemical production (as measured by ACC’s Chemical Production Regional Index) expanded by 2.6% in 2025, down from 4.0% the previous year. Asia-Pacific and the Middle East drove growth, while Europe contracted by 1.2%. Moderate global growth of 1.9% is anticipated for 2026.

Trade and Capital Spending: Challenges and Opportunities

Trade remains vital for U.S. chemical producers, who export nearly a quarter of their output. However, disruptions to global trade flows have taken a toll. Chemical exports fell 2.0% in 2025 and are expected to decline another 0.6% in 2026. Imports dropped 4.4% this year and will likely ease further next year. Despite these headwinds, the U.S. continues to maintain a trade surplus in chemicals.

Capital spending rose 2.4% to $39.8 billion in 2025, supported by reinstated tax credits. Yet, high borrowing costs and tariff-related uncertainties are expected to slow growth to 1.8% in 2026. Longer-term prospects remain bright, with spending projected to accelerate to 4% – 5% annually from 2027 onward.

Employment and Long-Term Outlook

Chemical industry employment held steady in 2025, rising just 0.1%, and is expected to remain flat in 2026. Despite near-term challenges, the long-term outlook for U.S. chemistry is positive. The industry’s energy and feedstock advantages, coupled with massive investments in advanced manufacturing, position it for likely sustained growth over the next decade, barring any shocks.

Risks and Variables

Several factors could alter this outlook. Trade and transportation policies remain wildcards, as do interest rate decisions by the Federal Reserve. Geopolitical conflicts, financial volatility and external shocks — from severe weather to cyberattacks — pose additional risks. On the upside, gains from AI-driven productivity and better-than-expected improvements in the U.S. investment landscape would promote more economic growth.

Conclusion: Building for the Future

While the chemical industry faces a challenging near-term environment, its fundamentals remain strong. Strategic investments, competitive advantages and global demand for advanced materials will likely underpin growth in the years ahead. For industry leaders, the task is clear: navigate today’s uncertainty and leverage the advantages of U.S. manufacturing to build a foundation for tomorrow.

The forecasts in this article reflect a compilation of consensus forecasts from other economists, consultancies and ACC analysis.