I want to say something plainly that the industry keeps dancing around: the trading environment that most chemical companies built their strategies for no longer exists.
Not because of this crisis. Not because of Iran or tariffs or any single event. But because the accumulation of events over the last six years has produced a structural shift in how the global economy actually works — and most of the strategic planning I see is still anchored to a world that was already gone before the Strait closed.
The S&P Global chief economist at WPC put a name to what's replaced it: geo-economics. Governments using tariffs, sanctions, export controls, and physical chokepoints not as distortions to be apologized for, but as deliberate tools of statecraft — ways to get other governments to do what they want. This is not a temporary aberration. It's the new operating system.
For roughly 40 years, the organizing logic of the global economy was what economists called the Washington Consensus. Markets good. Trade good. Free capital flows. Government steps back and lets efficiency allocate resources. That consensus underpinned the globalization of supply chains, the rise of just-in-time manufacturing, the logic of sourcing from wherever cost was lowest.
It produced real gains. The chemicals industry built global supply chains of extraordinary sophistication. Feedstocks flowed from the cheapest source. Products moved to wherever demand was highest. Capital found the most efficient home. And the assumption underneath all of it was that the rules were stable — that contracts would be honored, that chokepoints would stay open, that governments would compete for investment rather than weaponize trade.
That assumption is no longer operative.
China's rare earth embargo brought Ford, Stellantis, and GM near production shutdown before a negotiated truce. Tariffs swung from 145 percent to 20 percent in a matter of weeks based on a single negotiation dynamic. The Strait of Hormuz — the world's most critical energy chokepoint — was closed by state action. These aren't independent shocks. They're expressions of a consistent new logic: economic power as a weapon, deployed deliberately, without apology.
For chemical executives, this requires a genuine update to how strategy gets built — not a footnote adjustment to existing frameworks.
Start by auditing your assumptions. Every major strategic plan rests on assumptions about the trading environment. Write those assumptions down explicitly, then ask honestly: how many of them require stable, rules-based trade to hold? Those are your vulnerabilities.
Next, build a geopolitical stress-testing practice. Not a one-time exercise, but a regular discipline. For each major investment, feedstock source, or customer market, ask: what's my exposure if the political relationship between these two governments deteriorates? If you can't answer that, you don't fully understand the investment.
Finally, accept that optionality now has a price worth paying. The old model optimized hard for the lowest-cost single solution. The new model accepts some cost inefficiency in exchange for the ability to pivot when the rules change — because the rules will change.
The executives who are planning for the world as it is, rather than the world as it was, have a real competitive advantage right now. The gap between them and everyone else will widen every time the next disruption arrives.
And it will arrive.
Until next week,
Kendall -
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