Trump Tariffs Could Take Toll on Recycled Plastics EcosystemTrump Tariffs Could Take Toll on Recycled Plastics Ecosystem

Trade uncertainty, new capacity, and potentially flat consumer goods demand could strongly influence recycling and recycled resins in the coming year. And that “could be the biggest ride we've been on since 2022,” said Emily Friedman, senior editor and recycled plastics expert at ICIS, a global source of commodity intelligence.

Meanwhile, chemical recycling continues to transition from announcements of commercial-scale facilities to plants actually going online and producing material, Friedman noted. “This year has really been a proving out of those first few players, and I think others are stepping back to see how that goes. There's still a pipeline of investment on the chemical recycling side, but, pending economic conditions, some of that has been delayed because investments can be quite difficult in this area.”

In terms of materials, US imports of recycled polyethylene terephthalate (rPET) flake reached record highs, according to third-quarter data released in November by the International Trade Commission. The United States remains a net importer of plastic scrap, importing 22% more in Q3 2024 than in Q2 2024, although scrap exports to Mexico surpassed 2023 volumes.

Resin-dependent recycling markets

The US plastics recycling markets are “very resin dependent,” Friedman said. Some resins, like rPET, “are much more global as a market, whereas other resins like natural recycled high-density polyethylene (HDPE) are very local in terms of availability to the US market. Not a lot of other countries use milk jugs in the natural HDPE format.”

Related:The US Path to Polypropylene Recycling Success

Potential tariffs from the Trump administration would affect recycling markets, as well. 

“We trade closely with our northern and southern neighbors — recyclers in those regions treat the border more or less as a state line. Plastics recycling is very regional, so if you're in southern Texas, then Mexico is part of that region. If you're in northern Michigan, Canada is just as close to you — or closer — than trying to pull material from Kentucky or somewhere farther south. So those players regionally exposed to Canada and Mexico are assessing the potential impact of those proposed tariffs, as are buyers from those specific recyclers.

Recyclers in Canada and Mexico that consistently supply US converters and brand companies with recycled resin would experience a “fragmented impact to the market. Most would be untouched because they are only dealing with domestic material, but those who are regionally close would see some impact,” said Friedman.

Related:Coca-Cola Faces Backlash After Scaling Back Packaging Plans

Beyond North America, protectionist measures by the United States could precipitate further backlash, Friedman continued, as the US rPET industry relies heavily on trade with Asian and Latin American countries.

“We are a massive exporter of virgin polyethylene, and if we don't export our polyethylene, that could really hinder the local market in terms of weakness because of oversupply. That bleeds down to many different grades of recycled resin that compete with virgin on cost.

“If [other countries] were to be brought into scope, that could be a massive impact on a systemically short market — we don't have enough PET bottle feedstock, so we've been importing to make up for that and to keep the market more or less balanced.”

New capacity coming online

Some new players coming on the US recycling scene in 2025 will present more options for buyers, said Friedman, but also likely tighten existing feedstock pools.

“Our collection methods are not changing significantly in 2025. We have some new extended producer responsibility (EPR) programs starting, but I don't anticipate those will [have an] immediate and broad impact. It's going to be local to the state, and it probably will be delayed.”

Inflation 2.0 could affect demand for recyclate

As the US economy and consumers continue to struggle with inflation, Friedman suspects 2025 could be a tepid year for consumer goods that might consume recycled plastics.

“Disinflation has stalled, and I think there are some expectations that inflation could rise again pending these trade policies. If that were the case, I think demand, whether for consumer goods or durables, will be flat. I think that's the best-case scenario for many at this point, or at least that's what people are conservatively projecting.

“That means demand for recycled resin could equally be flat. We could see a push for increased recycled content percentages, because 2025 is such a landmark year for this market in terms of voluntary goals as well as some of the broader groups that have made goals. Initially, I would have said I do think companies will give one last good-faith effort to increase those recycled content percentages. It'll put more demand on the market. They might fall short, but again they're going to do the best that they can this year.”

Coca-Cola sets tone in sustainability goals

Coca-Cola’s December announcement that it was scaling back its 2030 packaging sustainability goals could set a trend, Friedman added. The company aims to use 35% to 40% recycled material in its packaging by 2035; the previous goal was 50% by 2030.

Coca-Cola has “been a leader in the recycled plastics space, and having it pull back now at the end of 2024 makes me question if other brands also would not consider” slowing their pace as well.

A significant hurdle for adoption of recycled content remains price pressure and the cost of rPET versus virgin resin.

While the latest Ellen MacArthur Foundation report on global sustainability commitments confirms progress is stalling, “you would hope that in 2024, being overall a better year in terms of demand, that the final data should show continued progress on recycled content. If we saw that demand in 2023, when everyone was destocking and thought we might go into a recession, then in 2024, when we felt much stronger about the economic picture, we should be doing better.”