The recycling industry is experiencing unprecedented disruptions. For other countries, starting Wednesday the Trump administration will begin enforcement of a 10% tariff on all imports. This long-awaited decision, made under unusual emergency economic powers, is meant to stabilize trade deficits and has left industry supporters and stakeholders pleased while alarmed. Trump—after much pressure—originally suspended these tariffs, though he later raised them on China. This decision made life much harder on recyclers who rely on these international materials.
Tariffs, you see, don’t always work that way. Rather, they are conditional and mutual, aimed precisely at the countries where the United States has the largest trade deficits. Among those are our most problematic major trading partners, including China, the EU, Canada, and Mexico. Further, the administration has exempted certain products from tariffs entirely under the U.S.-Mexico-Canada Agreement (USMCA). Industry advocates worry that these actions won’t do enough to mitigate the harms wreaked on the recycling industry by the COVID-19 pandemic.
Impact on Manufacturing and Recycling Processes
The threat of these tariffs has been wielded over the past few years as a cudgel to scare US companies into repatriating manufacturing. But industry insiders counter this effort upends existing, successful manufacturing and recycling systems. These processes are dependent on high recycled material inputs. The financial strain on recyclers can greatly increase their cost of operations. This added cost burden is creating a climate where domestic markets are unable to compete with cheaper virgin material sources.
Finally, industry advocate Adam Shaffer of Sustainable Manufacturing Associates emphasized that using recycled content in manufacturing processes is elemental.
“Seventy percent of steel comes from recycled content. We are ready, willing and able to participate in that.” – Adam Shaffer
Recycling operations usually have very slim profit margins, so they depend on some level of stable pricing from recyclable materials. The tariffs would increase the cost of recycled materials, putting them at an even greater competitive disadvantage with new materials.
Economic Uncertainty and Market Challenges
Overall health of the recycling market is inextricably tied to domestic and global economic conditions. Inclusive Trade Chair for the American Soybean Association, Michael Csapo, voiced serious concerns with the impact these tariffs will have on market stability.
“The overall recycling market is part of the globally connected supply chain, and its health is tied to the overall health of the domestic and global economies,” – Michael Csapo
Along with this broader economic uncertainty, there are important challenges that specific sectors within the recycling industry are currently grappling with. As an example, metals tend to have a strong market as there is a high cost of production for new metals. Shelie Miller reported that metal recycling is still possible, but other materials face a larger threat.
“There is almost always a good market for metals because the cost to make new metals is incredibly high,” – Shelie Miller.
Plastics and glass work on much tighter margins, making them more susceptible to market volatility in costs of recovered materials.
“Meanwhile, things like plastics and glass are really operating on a much closer margin. So any increase in recovered material cost is going to make it that much more difficult to compete against the virgin product.” – Shelie Miller
Local Impacts and Future Considerations
Local chambers of commerce and businesses that just want to plan their future are getting pinched with the costs of these tariffs and the uncertainties they bring. The Erie Regional Chamber expressed frustration when IRG canceled its plans for a plastics recycling plant project in Erie due to economic uncertainties linked to federal policies.
“The Erie Regional Chamber is frustrated by the financial pressure building due to economic uncertainty at the federal level, which IRG cited as the reason to cancel plans for its Erie plastics recycling plant project,” – Brandon Mendoza.
Michael Csapo reiterated concerns about ongoing economic uncertainty affecting the recycling industry.
“We are concerned about the current level of economic uncertainty.” – Michael Csapo
Tariffs are changing the landscape of international trade to the benefit of American domestic manufacturing. At the same time, stakeholders in the recycling industry remain on high alert. They continue to push for smart policies that ensure our businesses remain stable and competitive in a complex and competitive global market.
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