Global Trade Update (August 2025): Mobilising trade to curb plastic pollution |

The global plastic trade, valued at over $1.1 trillion in 2023, faces a systemic crisis as 75% of all plastic produced becomes waste, driven partly by significantly lower average Most Favored Nation (MFN) tariffs on plastics (7.2%) compared to natural substitutes (14.4%). This tariff disparity artificially cheapens fossil fuel-based plastics, hindering the growth of the $485 billion market for sustainable alternatives. The absence of a comprehensive international treaty and fragmented national regulations necessitates that the upcoming Global Plastics Treaty aligns trade policies to support sustainable solutions and circular economy investments, positioning trade as a key part of the solution.

Analysis

The global plastics economy, valued at over $1.1 trillion in trade for 2023, is operating under a structurally flawed and unsustainable paradigm. A key distortion stems from trade policy, where average Most Favored Nation (MFN) tariffs on plastic products stand at 7.2%, significantly lower than the 14.4% average tariff applied to natural, sustainable substitutes. This tariff disparity artificially suppresses the cost of fossil fuel-based plastics, which account for 98% of all plastics, and directly hinders the competitiveness of the $485 billion market for alternatives. The environmental and economic consequences are severe, with 75% of all plastic ever produced now classified as waste, creating a systemic crisis that disproportionately impacts developing nations. The current regulatory environment is fragmented, characterized by unaligned non-tariff measures that increase compliance costs and impede the growth of sustainable trade. The upcoming Global Plastics Treaty negotiations are therefore a critical inflection point, presenting the first opportunity for a comprehensive, multilateral framework to address the entire plastics lifecycle and align global trade policy with environmental sustainability.

Key Decisions for Investors

• Investors should scrutinize portfolios for exposure to the conventional plastics value chain, as the upcoming Global Plastics Treaty could introduce significant regulatory risks and compliance costs, while simultaneously creating tailwinds for the sustainable alternatives market.
• The $485 billion market for non-plastic substitutes, growing at 5.6% annually in developing countries, warrants attention; consider allocating capital to innovators in materials like glass, natural fibers, and seaweed that are poised to benefit from potential tariff reforms.
• Monitor developments in the Global Plastics Treaty negotiations for specific language on tariff and non-tariff measure reforms, as these policy shifts will be direct catalysts for re-rating companies involved in either plastic production or sustainable alternatives.
• Assess the vulnerability of companies reliant on petrochemical feedstocks, as a robust treaty targeting the full lifecycle of plastics could dampen long-term demand for the fossil fuel-derived materials that constitute 98% of plastic production.