US President Donald Trump's evolving tariff policies have created tremendous uncertainty for US importers of recycled polymers, and constant halts and flip-flopping from the administration have led some to pause their US operations.
Multiple importers told Argus that the constantly changing US tariffs on goods have upended business plans, and forced them to pause their US operations for the time being due to uncertainty about the taxes their material will face when it reaches US shores.
"You have to have some confidence that conditions will hold in order to import," one trader told Argus.
Trump's tariff rollout began on 1 February, when he announced that China would face a 10pc universal tariff, and the US's two largest trading partners, Mexico and Canada, would face 25pc universal tariffs.
At the time, market participants speculated that the 25pc tariffs on Canada and Mexico would make operations and sales more expensive for Mexican and Canadian recyclers, particularly those that trade bales or finished resin across the US border.
After some negotiations between world leaders, the tariffs on Canada and Mexico were delayed for 30 days, though the 10pc tariff on China went into effect as planned.
The 25pc universal tariffs on Canada and Mexico were pushed back again on 6 March, but tariffs on aluminum — a significant competitor to rPET packaging — went into place on 12 March.
The tariffs on aluminum have not been rescinded or paused, and the extra cost for imported aluminum as a result of the tariff could incentivize US consumer goods companies to use more PET in their packaging.
On 9 April, the US put into place varying reciprocal tariffs on a number of countries that export recycled resin to the US, including India, Malaysia and Vietnam. While rPET and vPET pellets were excluded from the reciprocal tariffs, importers of rPE, rPP and PET waste were not excluded from the tariff.
The same day, the reciprocal tariffs were pushed back 90 days in favor of a 10pc universal tariff that excludes Canada and Mexico.
China and the US's reciprocal tariffs have escalated into a trade war, and currently material from China faces a 145pc tariff. Since the price is too high for most importers to be willing to pay, in essence all recycled resin imports from China are halted.
China is one of the largest buyers of US virgin polyethylenehttps://direct.argusmedia.com/newsandanalysis/article/2675420), and the current trade war with China has the potential to increase domestic supply as exporters are forced to find new buyers for resin. Increased competition from oversupplied virgin resin could pull down recycled resin pricing.
Until some stability in tariff policy returns to the US, traders and importers will continue to turn to other destinations outside the US to sell their recycled resin.
