[OKRA] Article: Tariff choas weaves through recycled Commodity markets

[Ellen Bussert]

[image: image.png]
It looks like it is going to be a bumpy ride for recyclers in the
coming months.  See article below.






[image: image.png]
Tariff chaos weaves through recycled commodity markets
<https://resource-recycling.com/recycling/2025/04/08/tariff-chaos-weaves-through-recycled-commodity-markets/>
Published: April 8, 2025
Updated: April 8, 2025
by Antoinette Smith
<https://resource-recycling.com/recycling/author/antoinettesmith/>
[image: Cargo ship docked at logistics hub.]

*Regulations that can change from hour to hour are causing headaches for
buyers and sellers but could present opportunities should they remain in
place. *| *aapsky/Shutterstock*

After many weeks of shifting narratives and uncertainty, participants in
recycled commodity markets are working to navigate the new tariff
environment, in which buyers and sellers as well as customs officials
struggle to align federal mandates with on-the-ground implementation.

On April 2, President Donald Trump enacted steep tariffs on goods from most
other countries, citing inequities in trade relationships. Although Trump
has maintained his commitment to tariffs since his inauguration on Jan. 20,
throughout February and March he threatened, delayed
<https://resource-recycling.com/recycling/2025/02/04/plastics-recycling-industries-speak-out-on-tariffs/>
, imposed
<https://resource-recycling.com/recycling/2025/03/04/tariffs-on-canada-and-mexico-take-hold/>
, suspended
<https://resource-recycling.com/recycling/2025/03/11/some-tariffs-suspended-metal-duties-coming-this-week/>
 and delayed again
<https://resource-recycling.com/recycling/2025/03/04/tariffs-on-canada-and-mexico-take-hold/>
various
measures – in the process removing any semblance of calm from commodity
buyers and sellers alike.

“The big problem right now is there’s not complete clarity,” said James
Derrico, vice president of new business at commodity brokerage Cellmark, in
an interview with Resource Recycling. For example, for RPET resin making
its way to the U.S. from areas that include Southeast Asia and Canada, the
back-and-forth tariff dialogue can significantly and unpredictably increase
costs, he said.

“We crossed the border with material that had been scheduled that day to
cross (before tariff implementation), and then we got billed for it,” he
said, adding that the tariff applied to the RPET resin was incorrect when
compared to what the administration had previously indicated. “So we don’t
even know. We’re like, well, you want the wrong rate. And two, is this
real?”

The lack of clarity also is forcing market players to interpret the
regulations to the best of their ability. For example, Cellmark believes
its commodities are covered under the U.S.-Mexico-Canada Agreement. The
Recycled Materials Association has stated
<https://resource-recycling.com/plastics/2025/03/12/some-tariffs-suspended-metal-duties-spur-backlash/>
that
recycled material imports into the U.S. from Canada and Mexico qualify for
the USMCA tariff exemption, provided they were collected in North America
and that the importer goes through a process of certifying the material’s
origin.

In recycled fiber markets, so far pulp and paper products traded between
the U.S. and Canada and Mexico are exempt, according to Ryan Fox,
corrugated market analyst at Bloomberg Intelligence. A federal list of
exemptions
<https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-II.pdf> also
seems to support this interpretation. However, the cardboard boxes made
from the raw materials are subject to tariffs, and demand for the finished
product is the driving force, he said in an interview with Resource
Recycling.

But raw materials coming from outside North America are also subject to a
20% tariff, and European mills are balking at paying an extra $200 or $300
per ton and want someone else to pay it, Fox said.

Cellmark’s Derrico agreed, saying neither buyers nor sellers are keen to
pay more, and it’s unclear who should be paying the added costs. With
the previous
round of tariffs
<https://resource-recycling.com/recycling/2018/09/11/the-toll-of-the-tariffs/>
in
2018-2019, “we got a pretty big slap on paper crossing” between the U.S.
and Asia, he said. As a result, all of Cellmark’s supply contracts include
clauses to account for tariffs, he said, though the majority of the
company’s business is done on a spot basis.
Capacity shuffling?

One upside is that the tariffs could cause producers to leverage domestic
production capacity, according to Rabobank’s most recent containerboard
quarterly report
<https://www.rabobank.com/knowledge/q011422340-north-america-containerboard-quarterly-q1-2025>
.

“In the short term, it may lead to producers reshuffling their supply chain
to keep fiber within the country borders,” wrote Xinnan Li, senior analyst
of packaging and logistics at Rabobank. An example of the implications of
shuffling production is evident in the automotive sector. GM recently
announced it would temporarily shift
<https://www.wane.com/top-stories/fort-wayne-gm-plant-announces-increase-in-production-plans-to-hire-temporary-employees/>
some
truck production from its Canadian and Mexican plants to one in Fort Wayne,
Indiana.

But the full implications of such a shuffle are complex, especially on a
local level. For example, the idling of Stellantis plants across the U.S.
border as a result of tariffs will also result in temporary layoffs
<https://www.freep.com/story/money/cars/chrysler/2025/04/03/stellantis-production-pause-windsor-canada-mexico-tariff-impact/82790084007/>
for
about 900 U.S. workers making parts that are shipped to the Canadian and
Mexican assembly plants, according to the Detroit Free Press.

In addition, shifting production can complicate an accurate assessment of
demand, Fox said.
Support for domestic price increases?

Corrugated boxes imported into the U.S. from Europe – specifically white
top – have typically been priced well below their domestic counterparts,
Fox said.

Whether domestic sellers will continue to seek price increases
<https://resource-recycling.com/recycling/2024/12/10/price-increases-help-end-user-offset-higher-occ/>
remains
to be seen, Fox said, adding that anticipations of lower demand do not
support price hike initiatives. Bloomberg’s latest projections show box
shipments in the first quarter will be lower by 1.5% on the year, he said.
Paper fiber companies have increasingly decoupled
<https://resource-recycling.com/recycling/2025/02/04/fiber-companies-begin-to-shift-away-from-price-indexes/>
from
industry indexes that have not reflected their individual efforts to raise
prices amid ample capacity and moderate demand.

“It’s kind of one thing to talk about what the tariffs could do on paper,
but it’s really more of what tariffs are doing to the box buyers, because
they’re seeing demand for their product disappear,” Fox said.

For instance, tariffs on American liquor will result in a decrease in
shipments outside the U.S., and subsequently lead to lower demand
<https://resource-recycling.com/recycling/2025/02/25/mills-forecast-flat-fiber-pricing-but-tariffs-could-change-that/>
for
the boxes the liquor is shipped in.

Bloomberg’s most recent industry survey showed that expectations for
corrugated box demand have turned more bearish for demand in April,
compared to the beginning of the year. Responses were “relatively positive”
at the end of January, but by the end of March “it was much more negative,”
Fox said, with respondents citing on-again, off-again tariffs and customers
waiting to purchase amid the uncertainty.

“I think the most important thing to remember at this point is that some of
this stuff is literally changing on a daily basis,” Fox said. “We don’t
know if it’s going to or how long it’s going to stick around.”
Comparisons to previous disruptions

Despite weeks of leadup, the administration’s waffling made implementation
seem sudden, as the market could not be sure the tariffs were more than
mere threats or “negotiating tools.” In 2019, the first Trump
administration gave a 30-day notice for its tariff measures
<https://resource-recycling.com/recycling/2019/09/10/tariffs-weaken-manufacturing-business-confidence/>
against
China. That gave buyers and sellers time to determine how they wanted to
proceed, Derrico said.

“It’s a little bit different (now), and it’s kind of scary in that as of
today, it’s still not clear if things are exempt or not, and what tariff
rate is applied to each shipping lane.” As a result, Cellmark is waiting to
ship new loads until the company gains clarity, he said.

In a recent blog post
<https://ppec-paper.com/exploring-the-environmental-implications-of-potential-tariffs>
for
Canada’s Paper and Paperboard Packaging Environmental Council, Executive
Director Rachel Kagan also compared the current developments to previous
market disruptions. “We have seen before how external policy decisions can
have impacts on local markets,” she wrote, citing China’s 2018 National
Sword policy
<https://resource-recycling.com/recycling/2018/02/13/green-fence-red-alert-china-timeline/>
that
restricted imports of materials considered to be waste.

But China’s policy presented an upside, as evidenced in a Q&A
<https://ppec-paper.com/celebrating-international-womens-day-with-paulina-leung-from-emterra-group/>
PPEC
conducted with Paulina Leung, chief sustainability officer at member
company Emterra. “It opened up new markets in new countries and highlighted
the need to ‘onshore’ recycling in Canada and in North America,” Leung
said, adding that “the need for recyclers to have a diversified customer
base can never be underestimated.”

In addition to adding another layer of complexity to brand owners’ progress
on incorporating recycled materials, even a threat of tariffs creates
uncertainty that stymies short- and long-term planning, which “could impact
or even delay progress or investments in corporate waste reduction and
sustainability initiatives,” Kagan wrote, echoing the complaints of market
players who declined to comment publicly, due to the constantly shifting
market conditions and fear of retribution.
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