Trump's Election Could Bring Significant Changes To The Plastics Industry.

Local time on the early morning of the 6th, the Republican presidential candidate and former President of the United States, Donald Trump, declared victory in the 2024 presidential election. Predictably, Trump's rise to power will stir the global landscape.

01.Changes in U.S. Negotiation Stance

For the plastics industry, the most pressing topic of concern is the upcoming "Intergovernmental Negotiating Committee for an International Legally Binding Instrument on Plastic Pollution, Including Marine Plastic Pollution, Fifth Session (INC-5)" to be held in South Korea. The conference aims to reach a legally binding international agreement to comprehensively address the issue of plastic pollution.

In previous rounds of negotiations, the United States, as one of the world's largest plastic producers, has maintained a neutral position, avoiding entanglement in factional disputes over whether to restrict and reduce the production of virgin plastics.

However, in August of this year, the Biden administration suddenly shifted its stance, supporting restrictions or reductions in the production of virgin plastics, aligning with countries like the European Union, Canada, and South Korea, but diverging from opinions of countries such as Saudi Arabia, Iran, and Russia. This stance has also been strongly opposed by some Republicans in Congress.

Trump's election could change all of this. Congressman Jared Huffman, a California Democrat who attended the INC-4 conference, said in an interview with Politico that Trump is likely to alter the current tough stance of the United States, which would be a significant victory for oil-rich countries.

According to The New York Times, oil interest groups have donated more than $75 million to Trump's political action committee, and Trump's campaign team has also clearly stated that the goal of his second term will be to increase fossil fuel production.

Affected by Trump's election, shares of major U.S. oil companies rose sharply on Wednesday. As of noon Eastern U.S. time, Exxon Mobil rose by 1.39%, Chevron by 2.72%, Conoco Phillips surged by 3.85%, and Occidental Petroleum increased by 2.32%. This increase reflects the U.S. market's expectation of a potential recovery in the fossil fuel industry due to Trump's policies.

Additionally, Mario Loyola, who served as the Deputy Director for Regulatory Reform at the White House Council on Environmental Quality under Trump, also stated that Trump would take a "stubborn attitude" towards any treaty reached in the negotiations and would "question whether the agreement reached is the best possible agreement." After all, Trump announced shortly after taking office that the United States would withdraw from the Paris Climate Agreement, considering it detrimental to the U.S. economy.

02.Higher Tariffs Affecting the Plastics End Market

In this election, Trump's tax policy proposals mainly focused on two aspects: tax cuts within the United States and the imposition of tariffs on imported goods. He stated that once he returns to the White House, he would impose tariffs of 10% to 20% on all imported goods to the United States, with plans to impose tariffs as high as 60% or even higher on Chinese imports. This policy reflects Trump's consistent trade protectionism and unilateralism.

For the plastics industry, Trump's election as president means higher tariffs and suppression. Although some of these tariffs were opposed by organizations such as the American Chemistry Council during Trump's first term because they would disrupt supply chains. For example, on the one hand, industries such as ethylene baseboard manufacturers and mold manufacturers support tariffs protecting their products, believing it helps maintain their market competitiveness; on the other hand, large plastic processors oppose some of these tariffs, fearing they will increase costs and affect corporate profitability. U.S. mold manufacturers prefer higher tariffs on China. In May of this year, when the Biden administration announced a 25% tariff on Chinese molds, the American Mold Manufacturers Association stated that the tariff should be set between 30% and 50%.

Moreover, Trump's election also brings uncertainty to the plastic end product markets such as the automotive industry. Automakers like Honda have stated that permanent tariffs on Mexico would affect the number of cars shipped from Mexico to the United States and could lead them to consider transferring production. This uncertainty is undoubtedly a huge challenge for the automotive industry, which relies on a stable supply chain.

As the world's two major economic powers, trade disputes between China and the United States have directly led to a significant reduction in bilateral trade scale. Although some export companies have tried to evade tariff barriers by setting up factories in Southeast Asia, the United States has taken measures to encircle and compress the living space of Chinese exporters. This situation has led to a severe loss of many product orders, and the global supply chains of various industries such as furniture, electrical machinery, electronics, textiles, photovoltaics, and automobiles have been deeply affected.

In September of this year, the United States introduced a bipartisan bill - the "Accelerating Plastics Recycling and Recycling Innovation Act of 2024," aimed at promoting improvements in plastic recycling across the United States to increase the use of recycled materials in packaging. The bill requires that by 2030, the content of recycled materials in plastic packaging should be at least 30%.

Although U.S. policies will change during Trump's next term, they will not have a significant impact on current state policies. Several states in the United States have also introduced minimum recycled material requirements for packaging, with some states like New Jersey passing laws focusing on recycled materials, and other states proposing related requirements in expanded producer responsibility laws.

Related report data show that North America will become the fastest-growing recycled plastics market. Against the backdrop of the international convention to end plastic pollution and brand commitments, the demand for recycled plastics and recycling equipment in the United States is increasing day by day, making it a target market for China's outstanding recycling enterprises and equipment companies.