Recycling Policy | Tariffs ·
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AMBR executive Miriam Holsinger, who serves as Co-President and Chief Operating Officer of Eureka Recycling, recently spoke with Resource Recycling about how the Trump administration’s tariffs on aluminum and steel may affect recycling operations. Nationwide, these two metals comprise roughly 6% of curbside collection. While recyclers expect short-term gains from increased domestic demand, Miriam cautioned that “the problem is what happens long-term.” If tariffs ultimately slow manufacturing, the market for recycled materials—and their prices—could drop.
Recycling, like any business, depends on balanced economics to remain viable. When recyclables are collected curbside, they’re sorted into various commodities—paper, aluminum, plastic, and more. An uptick in the value of one commodity can temporarily offset or cushion a drop in another, keeping a recycling facility’s revenue stable. But looming global forces—tariffs, currency swings, and shifting consumer behaviors—can cause these commodity markets to fluctuate.
Most recycling facilities use the value of commodities to offset the price of processing (sorting and baling) mixed recyclables. Additionally, some facilities have contracts with local municipalities to share revenue from the sale of commodities since the material comes from the community, so the community shares in its value. When the value of commodities goes down, recyclers need to charge greater processing fees to continue running an economically viable business.
Different factors influence the value of a commodity. For example, let’s look at the factors that influence the value of aluminum.
Factors Influencing Aluminum Prices
Several factors can influence the price of aluminum and, consequently, its value as a recycled material:
- Currency fluctuations: The dollar’s value in international markets affects the cost of trading materials with other countries, which can raise or lower the price of aluminum.
- Tariffs: Reduced imports of virgin aluminum due to tariffs can increase the price of domestically produced recycled aluminum.
- Economic recessions: Lower consumer demand for aluminum-based products (such as cars or beverages) can reduce the price.
- Changing trends: Shifts in consumer behavior or packaging choices can impact demand. For example:
- A pandemic might lead to increased at-home consumption, spiking the demand and price of aluminum cans.
- Conversely, if aluminum prices rise due to tariffs, people may stop purchasing aluminum products or companies may switch to cheaper alternatives, decreasing demand for recycled aluminum.
The Impact of Material End-Uses on Market Volatility
The end-use of a recyclable material also plays a role in its market stability. For example, PET bottles—once primarily recycled into products like carpets and clothing—suffered from market instability during economic downturns as people cut back on non-essential purchases. However, with technology advancements, PET bottles are increasingly recycled back into new bottles, helping stabilize prices.
Materials with circular supply chains tend to be less volatile. For example, when companies are required to use recycled materials before sourcing new ones, any drop in the demand for bottles due to economic downturns will stabilize as fewer bottles are collected, balancing demand and supply.
The Role of Tariffs and Policies in Recycling
While tariffs on materials like aluminum and steel can have both positive and negative effects on recycling, Miriam emphasizes the need for policy protections. If there are no minimum recycled content or extended producer responsibility for packaging laws that encourage companies to purchase recycled content, economic slowdowns could lead to a glut of recyclable materials. In such cases, recyclables often become the first materials to be discarded in favor of cheaper virgin resources, such as oil or timber, leading to a “race to the bottom.”
This scenario mirrors events from the 2008 housing crash when the price of houses fell dramatically, leading to a surplus of cheap timber. Paper mills purchased these trees at low prices, reducing their demand for recycled paper. This caused the value of recycled paper to drop to zero or even lower in many places. A similar situation occurred in 2018 when tariffs reduced trade between the U.S. and China, affecting global recycling markets.
The Economic Reality of Recycling
From a zero-waste perspective, tariffs are not inherently bad or good—what matters are the policies in place to prioritize recycling. Without these protections, the impact of tariffs can make recycling more expensive as the value of sorted materials drops. In such cases, cities and customers may be forced to cover the increased costs of sorting and processing.
Some argue that recycling should be economically competitive with virgin materials to justify its cost. However, not only does this ignore the tremendous environmental and public health cost of extraction and production, but it also ignores the significant subsidies supporting industries like mining, deforestation, and oil and gas extraction. Trying to make recycling economically self-sustaining while competing with these heavily subsidized industries is akin to asking someone on a minimum wage job to live like a trust fund recipient—it completely disregards the unseen financial support behind the scenes.