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Methyl bromide kills the bacteria which causes the cheese to go mouldy.
But scientists say it damages the ozone layer and shouldn't be used.
Cheesemakers say it will mean more bland cheese that's more expensive to make.
Chipping Campden cheese wholesaler Simeon Hudson-Evans said: "This policy could sound the death knell of real, cloth-bound cheese.
"The production of cheddar could become unviable. It has been left to mature in cloth for hundreds and hundreds of years.
"It allows the cheese to breathe and dry out properly. It also creates a rind. Methyl bromide is used in aircrafts and ships to kill bugs, so why can't it be used in cheese?"
He added: "The only other method I can think of to get rid of mites would be to use a brush.
"But it would be so much more labour intensive and cost businesses a lot more money to employ people to do it."
Cheesemaker Marion Conisbee-Smith, who has a herd at Oakridge near Bisley, said: "This ban could have a big impact on the cheese industry.
"It would be awful if all cheddar could only be mass-produced wrapped in plastic. Cheddar needs to mature for 18 months or so.
"Stopping the use of the chemical will mean the cheddar won't be able to mature. It will have an effect on the taste."
Mrs Conisbee-Smith said having to scrape mould off by hand would be time consuming and expensive.
But Jon Gleeson, owner of the Cotswold Cheese Company in Moreton-in-Marsh, is confident the cheese industry will find a way of coping.
He said: "I think this law could create serious financial implications for the cheese industry.
"But it's a case of adapting and I'm sure suppliers will be able to come up with some kind of alternative to prevent mould occurring."
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