On tariffs and federal spending, the recycling industry confronts uncertainty and adjusts plans across the U.S. | aapsky/Shutterstock

This article appeared in the May 2025 issue of Resource Recycling. Subscribe today for access to all print content.

After many weeks of shifting narratives and uncertainty, participants in recycled commodity markets are working to navigate a 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, March and April he threatened, delayed, imposed, suspended and delayed again various measures — in the process removing any semblance of calm from commodity buyers and sellers alike.

Country-specific tariff rates ranging from 11% to 50% were temporarily paused in early April after multiple days of significant stock and bond market turmoil. But plenty of import duties remained in effect as of press time, including a 10% baseline tariff for most countries, a separate 25% levy on aluminum and steel imports and far steeper tariffs on trade between the U.S. and China.

“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 early April interview. 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.

“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 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.

Pulp and paper products traded between the U.S. and Canada and Mexico have been exempt, said Ryan Fox, corrugated market analyst at Bloomberg Intelligence. A federal list of exemptions also seems to support this interpretation. However, the cardboard boxes made from the raw materials were subject to tariffs, and demand for the finished product is the driving force, he said.

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 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.

“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 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 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. Bloomberg’s projections showed box shipments in the first quarter will be lower by 1.5% on the year, he said.

“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., subsequently lowering demand 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,” with respondents citing on-again, off-again tariffs and customers waiting to purchase.

“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 threats or “negotiating tools.” In 2019, the first Trump administration gave a 30-day notice for its tariff measures 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 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 that restricted imports of materials considered to be waste.

But China’s policy presented an upside, as evidenced in a Q&A 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,” and “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.

Uncertainty hits recycling projects

Dramatic federal funding cuts have affected at least two plastics recycling efforts, contributing to a major project being canceled in Pennsylvania and forcing an accelerated timeline for self-sufficiency at an Alaska composite lumber operation.

In Pennsylvania, International Recycling Group canceled plans for its Erie plastics recovery plant, according to a recent press release.

The company said a freeze of unspecified duration on federal funding commitments was among the financial challenges that contributed to the cancellation. The U.S. Department of Energy’s Loan Programs Office had guaranteed IRG up to $182.6 million in loans last summer, more than half of the $300 million required for the project.

Other financing challenges included tariffs on materials and equipment made outside the U.S., which increased anticipated costs “substantially,” according to the release. The company also cited difficulty in securing offtake agreements for recycled plastics from manufacturers and brand owners, “many of whom are cutting back on sustainability pledges.”

“I am personally devastated after 18 years of working to bring this vision to a reality that we have failed to overcome these challenges,” said Mitch Hecht, IRG founder and CEO.

The Erie Regional Chamber and Growth Partnership “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,” said CEO Brandon Mendoza in a written statement. “We recognize the significant economic opportunities it could have brought to Erie. This project had significant support at the state and local level, across public and private sectors, and to see it pulled is a significant loss.”

The plant would have converted 160,000 tons per year of post-consumer plastics into about 100,000 tons per year of recycled resin, and would have produced about 20,000 tons a year of CleanRed feedstock for steelmaking furnaces.

IRG also discontinued its newBin collection service in Erie, and the company will remove any remaining collected material and attempt to find a buyer.

Alaska Plastic Recovery had likewise been receiving funding from the U.S. EPA for collecting recyclable plastics to use in its Grizzly Wood composite lumber. But under the Trump administration, such funding is uncertain.

“We were using grant income to subsidize our collection efforts, and that funding is no longer available,” said CEO Patrick Simpson in an interview.

In a recent letter to customers, Simpson said, “Due to recent changes in federal funding, we now need to accelerate our timeline and achieve breakeven within the next 9 months,” instead of the originally planned 18 months. The company also is raising prices for its lumber, and sales of Grizzly Wood also will need to double in 2025 to meet sustainability goals.

Residents also will be asked to pay $5 per visit to the community collection center to reach the financial breakeven point, Simpson said. The company partners with the city of Anchorage for recycling collection.

“We are transitioning more quickly from a subsidized or partially subsidized business to a completely sustainable business as a result of this,” Simpson said. “I don’t think any of that is necessarily bad. I think we’re a small business, and we need to learn to adapt. Things are going to happen, whether it’s in the political climate or something in the environment.

“Instead of a gentle glide path to full sustainability, it’ll be a little bit more of an abrupt climb, but we’ll get there,” he added.

Despite the funding loss, the company could benefit from the new administration’s emphasis on oil and gas exploration, which is key to Alaska’s economic health. Simpson’s company collects and recycles plastic thread protectors for the metal fittings used in such projects as a proposed 800-mile trans-Alaska pipeline to move natural gas from the state’s North Slope to its southern ports for export, likely to Asia.

As for what’s ahead, “no one has a crystal ball that good,” Simpson said. “But for today and for right now, we’re going to figure it out. We think that’s a good plan, and I think we’re going to get through this.”

This year’s Plastics Recycling Conference featured the first Textile Recovery Summit, a special track devoted to the most recent developments in an old industry. | Big Wave Productions/Resource Recycling, Inc.

This article appeared in the May 2025 issue of Resource Recycling. Subscribe today for access to all print content.

Textile recycling was a novel addition to this year’s Plastics Recycling Conference, but as several experts said at the event, the topic’s roots go back centuries, and its contemporary issues and developments are familiar to just about any recycled material.

A need for better data and better education? Check. A nascent but growing extended producer responsibility apparatus? Check. Advancing technologies for identifying and sorting? Check. An increasingly urgent need to do more? That’s an easy one.

The U.S. produces around 17 million tons of discarded clothing and other fabrics each year, according to RRS, and more than two-thirds of all of those fibers and strings are made of polyester, nylon and other forms of plastic. About 15% of this mountain of material is repurposed or processed into rags, insulation and similar goods or, rarest of all, new clothing.

“Big picture here, we’re generating lots of textiles, and we’re not doing a very good job of recovering it,” said Marisa Adler, a senior consultant at RRS.

Adler partnered with Resource Recycling, Closed Loop Partners, Goodwill Industries and textile trading company Whitehouse & Schapiro to put on the inaugural Textile Recovery Summit, a focused series of sessions and workshops at this publication’s annual plastics conference. The combo event brought more than 2,400 attendees to National Harbor, Maryland, in March.

Speakers and innovators described an industry in the midst of a sea change, as new policy and new technology take hold.

Untrustworthy labels

One crowded workshop gave a hands-on opportunity to simulate one of the first steps in recycling textiles: sorting by composition, most fitting end market and other characteristics. Attendees dug through genuine bales of donated clothing, using their best judgment and portable fabric scanners to answer such questions as whether an old cardigan was made of wool or polyester and whether it would be better off in a nice vintage store or cut into rags.

Identification and sorting are essential for maximizing a used textile’s value, Adler and others said, but there’s a big problem with the little tags that purport to say what a piece of clothing is made of.

“There’s a high inaccuracy on the labels; you can’t trust them at all,” said Helio Moreira, head of sorting for Textile House (stylized as TEXTILE house), a Slovakian company that runs almost 200 secondhand clothing stores across Europe.

To get more reliable information on its wares, Textile House has begun leaning on equipment from Picvisa, a Barcelona-based company that combines spectroscopy with artificial intelligence to identify color, fiber type, texture and more. The system can be tailored to handling post-consumer clothing, for fabric off-cuts and clippings, and just for shoe soles, said Silvia Gregorini, Picvisa’s business development manager.

“Probably one of the key elements is that we have the knowledge on the technology, and they have the knowledge on the market,” Gregorini said of her company’s partnership with Textile House. “Of course there’s an investment to do when we install this technology, but on the long term this is a machine that allows you to scale up volume.”

Similar systems were also highlighted during the textile summit’s innovator stage, a pitch competition among five recycling start-ups.

California-based Refiberd, for instance, uses a hyperspectral camera and an AI system trained on a library of thousands of fiber samples to detect all manner of fiber blends, said Rebecca Geppert, director of partnerships. The system was about to be deployed to a commercial facility for the first time.

“The hyperspectral camera gives us the spectral data, but without anything to interpret that spectral data, you really don’t have anything that detects the material composition,” Geppert said.

Besides fiber composition, chemical additives make clothing even more complicated, and even the same product from the same company can differ from one piece to another, said Christopher Wai, co-founder and CEO of Sixone Labs, which the contest’s judges picked as the winner.

The British Columbia-based company builds a database of all of those different permutations to guide chemical recycling, which breaks plastics down into their molecular components for remanufacture but often relies on pure feedstock. Wai said Sixone’s database allows this process to be finetuned so that polyester can be extracted from fabric that would conventionally be considered impure, such as a cotton-poly blend, while also leaving the cotton and other components unharmed for other uses.

“As we think about clothing, I look at it as a big puzzle,” Wai said. “This is a data problem more than a recycling problem.”

Emergence of EPR

Another panel discussion dug into California’s SB 707, an EPR law for textiles that passed late last year and is the first of its kind in the U.S. Like most EPR programs for other materials, the law requires producers of apparel or textile articles to form a producer responsibility organization that will conduct a needs assessment and set recycling targets over the next few years, among other duties.

The program’s details are in development, but it’s already creating exciting opportunities to grow textile recycling and set an example for other states, several experts said. Chelsea Murtha, senior director of sustainability for the American Apparel & Footwear Association, said member companies often discuss their circularity goals with her, but only one-on-one.

“It has been a struggle to give them a space to really have those conversations at the industry level that doesn’t violate anti-trust guidelines,” she said. EPR can give them “that space and that platform.”

Joanne Brasch, director of advocacy at the California Product Stewardship Council, also praised the law’s emphasis on repair, as distinct from straight resale on one hand and deconstructive fiber recycling on the other.

“There’s this entire stream in our textile stream that, with just a little repair, with a little upcycling, some (innovation) and creativity, it can still have its reuse functionality,” she said. “One thing that 707 does is create that third stream, and it puts a lot of funding into that repair stream.”

EPR for clothing has been around for years in several European countries and has been invaluable in ensuring the existence of end markets for textiles and fibers, Moreira at Textile House said.

“We are quite reliant on that, and if this type or shape of legislation would be widespread throughout the EU, it could put up a demand. Otherwise, we will never be as competitive as Asian feedstock,” he said.

Still, several panelists voiced concerns over the California law’s implementation, saying regulators should listen to industry expertise, while the industry should also prepare for new and more extensive data collection and other changes. As the first state EPR programs for packaging go into effect, Andriana Kontovrakis, director of EPR solutions for Reverse Logistics Group, pointed to widespread procrastination among packaging companies as an example to avoid.

“A number of big companies came to us in the summer and were like, ‘We’re not ready, what do we do?’ And we’re like, you should’ve come to us like two years ago,” Kontovrakis said with a laugh. “The more forward-looking you are, the farther out you start, the better off you are.”

Nareeta Martin/Unsplash

California continues to be a leader in sustainability with the passage of a series of laws aimed at increasing diversion, waste reduction and consumer knowledge.

SB 54

In 2022, California enacted Senate Bill 54, or the Plastic Pollution Prevention and Packaging Producer Responsibility Act. SB 54 is an extended producer responsibility law aimed at reducing plastic and packaging waste and shifting the cost of recycling this material from the consumer back to the producer. This is done primarily by establishing a framework for development of a producer responsibility organization, an entity which producers join and pay fees to. The PRO then implements and funds waste management, recycling and reduction practices. Circular Action Alliance was selected as the PRO for California and other states.

Additionally, SB 54 mandates that certain sustainability and plastic reduction thresholds be met in the coming years:

• 25% reduction in all single-use plastic packaging and single-use plastic cutlery, plates, cups and containers by 2032.
• 65% recycling rate for all single-use plastic packaging and the same types of single-use plastic food serviceware by 2032.
• 100% of single-use packaging (including non-plastics like glass, ceramic, metal, paper and fiber, and wood and other organics) and single-use plastic food serviceware must be recyclable or compostable by 2032.

Smaller steps toward these goals are required for the years leading up to 2032. For example, single-use plastic packaging and single-use plastic food ware must be reduced by 10% by 2027 and 20% by 2030. Importantly, the 25% reduction and 65% recycling rate requirements only apply to plastic items, while the general requirement that all single-use packaging be recyclable or compostable by 2032 applies to any packaging material covered by the statute.

In order for producers and the PRO to work toward these requirements, the California Department of Resources Recycling and Recovery, the state agency in charge of implementing SB 54, was tasked with establishing a Covered Material Category list to establish which materials are recyclable and compostable at the requisite levels. CalRecycle released its first CMC list on Dec. 28, 2023, and updated it on Jan. 1, 2025. This list helps producers and the PRO determine which materials will meet California’s standards and which materials they need to phase out.

Over the last few years, industry groups, environmental advocates, regulators, lawmakers and the PRO have been working together to determine how the law will be implemented.

On March 7, 2025, the deadline to finalize regulations for SB 54, Gov. Gavin Newsom told CalRecycle to restart the regulatory rulemaking process for SB 54 due to concerns about the potential costs to businesses and consumers. Now that Newsom has ordered negotiators back to the drawing board, it is unclear how and if broader deadlines in the statute will be met.

As it stands, in California, the first major deadline for producers is Jan. 1, 2027. By this date, producers must both join a PRO and reduce single-use plastic packaging and single-use plastic foodware by 10%. Both the PRO and California lawmakers have stated that the statutory timelines remain in effect despite setbacks for regulations.

SB 343

In 2021, the year before SB 54 was enacted, California adopted SB 343, or the “Truth in Recycling” law. This law seeks to give consumers “accurate and useful information related to how to properly handle the end of life of a product or packaging,” primarily through creating stricter requirements for when companies can use the familiar “chasing arrows” symbol or any other indicator of recyclability on products and packaging.

The law requires a minimum demonstrated level of actual recycling for various materials before they can be labeled as recyclable. To this end, SB 343 directed CalRecycle to conduct research and publish data on the materials collected, sorted, sold or transferred for recycling in California, including whether the materials meet recyclability thresholds. Manufacturers and other interested parties can then use the data to determine whether compliant recyclable claims can be made. CalRecycle published its final Material Characterization Study report on April 4, 2025, and manufacturers are required to comply with labeling requirements based on data in this report starting Oct. 4, 2026.

SB 343 and SB 54 are parallel laws. While SB 343 restricts labeling products as recyclable unless certain threshold levels of recycling are met, SB 54 simultaneously mandates that California work toward meeting those thresholds. Additionally, the CMC list for SB 54 is built from the findings of the SB 343 Material Characterization Study.

Other EPR Laws

Outside of California, other states across the nation are prioritizing waste reduction with their own EPR laws, including:

• Maine: Stewardship program for packaging material, Maine Rev. Stat. § 2146 (2021).
• Oregon: Plastic Pollution and Recycling Modernization Act, SB 582 (2021).
• Colorado: Producer Responsibility Program for Statewide Recycling Act, House Bill 22-1355 (2022).
• Minnesota: Packaging Waste and Cost Reduction Act, HF 3911 (2024).

Key Takeaways

SB 54 and SB 343 set ambitious goals for California, and it is not clear that the state is on track to meet them. Because these laws have important deadlines and milestones in the coming months and years, businesses affected by them should stay informed. Registering with CAA, California’s PRO, can help businesses ensure they are receiving the most current information.

We expect that more state EPR laws will be passed in the near future. Prudent businesses that operate nationally should make sure to keep up with these laws to remain compliant in this ever-changing landscape. Competent environmental counsel may be required to navigate these innovative laws.

Sedina L. Banks, Sherry E. Jackman and Bryce Lourié are attorneys in the Environmental Group at Los Angeles-based Greenberg Glusker and specialize in advising clients on complex regulatory compliance matters and litigation.

The views and opinions expressed are those of the author and do not imply endorsement by Resource Recycling, Inc. If you have a subject you wish to cover in an op-ed, please send a short proposal to [email protected] for consideration.

Aleksandar Malivuk/Shutterstock.

This year business news headlines have been dominated by tariffs imposed on imports and their impact on a range of U.S. businesses and consumers. While much is up to debate, one thing is clear: The tariff environment will continue to be fluid in the months ahead, and the scrap metal recycling industry is not immune to its dynamics. Moreover, the industry’s scale and the role it plays in addressing environmental and supply chain challenges are not widely recognized.

The scrap metal industry in the U.S. is enormous, second only to the whole of the Asia-Pacific region in consumption and processing. The American Iron and Steel Institute reports that nearly 70 million tons of domestic steel is recycled annually to make new steel, and according to IBIS World, the U.S. scrap metal recycling industry in 2024 registered total revenue of $43.3 billion, with market size growth at a compound annual growth rate of 4.3% between 2019 and 2024.

Moreover, the western U.S. scrap metal recycling market alone accounts for nearly one-fourth (24.9%) of the national share, and the region is projected to register a CAGR of 5.6% from 2022 to 2032. With a long runway for growth projected, it is critical to understand the potential short- and long-term impacts tariffs will have on the scrap metal industry, especially if you are an operator in this vertical.

How could tariffs on steel and aluminum imports affect those forecasts? Much can be learned from the introduction of tariffs in 2018. Based on previous scenarios, tariffs will likely increase domestic demand for scrap metals as U.S. manufacturers seek local sources to mitigate the added costs of imported primary metals. There are several other factors to consider when looking at the potential impacts tariffs will have on this industry in both the short- and long-term.

Short-Term Benefits for U.S. Scrap Recyclers

Initially, tariffs on metals should help domestic recyclers by increasing demand for U.S. scrap, raising prices and profits. The domestic steel and aluminum industries will likely benefit from reduced competition from imports, which indirectly supports the recycling sector.

In the immediate term, the reintroduction of tariffs is likely to lead to an increase in U.S. steel prices. This is due to the reduced availability of imported steel, prompting domestic mills to raise prices to balance supply and demand.

Over the next three months, the impact on recyclable steel prices will depend on several factors:

• Supply chain adjustments: Domestic steel producers may ramp up production to meet demand and, hence, potentially stabilize prices.
• Market sentiment: If the market anticipates sustained tariffs, prices may continue to rise. Conversely, expectations of tariff removal could lead to price corrections.
• Global trade dynamics: The ebb and flow of responses from the current administration and other countries, such as retaliatory tariffs or trade agreements, will influence U.S. steel and aluminum prices. We are already seeing this as the European Union, China and Canada react to the U.S. administration’s tariff actions.

Long-Term Uncertainty Due to Global Trade Disruptions

The long-term impact of the tariffs will depend on several factors. If U.S. steel and aluminum production remains strong, scrap recyclers could continue to benefit. However, if demand weakens or if global trade disruptions persist, recyclers may face declining exports, increased market volatility and potential price declines.

Other factors include:

• Domestic production capacity: The ability of U.S. steel manufacturers to expand production will be crucial, and the announced tariffs come at a time when industrial production and capacity utilization of these metals have declined to unusually low levels. However, if this capacity is not enough, building new smelters or reopening closed plants is a time-intensive process and could take years.
• Market equilibrium: As domestic production adjusts, the market may reach a new equilibrium, with prices stabilizing based on the new supply and demand dynamics.
• Policy developments: Changes in trade policies, such as the removal or modification of tariffs, will directly affect steel prices.
• Costs and consolidation: In early April, global brokerage firms began to raise their projections for the likelihood the U.S. could enter a recession. If one were to materialize, the impact on the scrap metal industry will largely hinge on the duration. A prolonged downturn could sharply reduce demand, drive up costs and trigger consolidation — potentially favoring larger, well-capitalized scrap metal operators.

Navigating Uncertainty

Simply put: The market prefers stability and certainty. However, there are steps that scrap metal operators can take to approach planning when there is a high level of uncertainty ahead.

1. Don’t panic: Stay prudent and plan to adapt to the circumstances, but don’t overreact. In other words, business owners should take steps grounded in the facts.
2. Experienced leadership: Ensure there is a battle-tested team in place surrounded by trusted advisors. Businesses with strong, experienced leadership are well-equipped to navigate tariffs as well as other challenges and opportunities that will arise in 2025 and beyond.
3. Diversify: In any market, diversification is key, but now even more so. Companies are taking steps to further broaden their customer base and supply chains. This includes strategic acquisitions that provide flexibility, such as securing railroad access to U.S.-based steel mills to mitigate potential export challenges from tariffs. Regardless of market conditions, diversification must remain a priority because with the stroke of a pen, industry dynamics can shift, requiring companies to pivot quickly and implement plan B or C.
4. Enhance inventory management: The introduction of tariffs increases price volatility. The knee-jerk reaction is to stockpile inventory. However, such actions need to be taken with care. Diligent inventory management is key to prevent overexposure and maintain price margins. The more efficient companies are in managing their inventory, the better and less expensive it becomes ­— reducing the need for the use of other tools like hedging.

The tariffs first imposed on aluminum and steel back in 2018 had mixed effects on the U.S. scrap metal recycling industry. While they initially boosted domestic demand and prices for ferrous and non-ferrous scrap, they also disrupted global trade patterns and increased market volatility. We expect similar dynamics will be at play in 2025. In the short term, recyclers will potentially benefit from higher prices, but in the long run, retaliatory tariffs will shift global trade flows and potential oversupply issues could create challenges.

The ultimate impact of the reinstated tariffs will depend on the trajectory of U.S. steel and aluminum production, as well as ongoing trade policies and international market adjustments. To navigate these challenges, business leaders must stay strategic — keeping a level head, diversifying their customer base and supply chain and closely monitoring inventory levels to protect margins. It will not be easy. Companies that maintain optionality and remain flexible will be best positioned to thrive in an ever-evolving global landscape.

Craig Takeshige is a senior vice president and Orange County market leader at Umpqua Bank. He is a commercial banker with 30 years of experience serving the financing needs of the scrap metal industry.

Kevin Foley is a senior vice president and commercial & industrial relationship manager at Umpqua Bank. He is a commercial banker with 15 years of experience and deep expertise in manufacturing, distribution and commodity-based industries.

The views and opinions expressed are those of the author and do not imply endorsement by Resource Recycling, Inc. If you have a subject you wish to cover in an op-ed, please send a short proposal to [email protected] for consideration.