Economic Outlook: Plastics Industry
OECD projects global GDP growth to weaken, with US facing steeper decline. Tariffs cited as a leading cause, impacting plastics industry and manufacturing.
“OECD Economic Outlook: Plastics Industry Impact,” Plastics Today
The plastics industry faces a challenging economic landscape as the latest Organization for Economic Cooperation and Development (OECD) economic outlook reveals that while global growth proved more resilient than expected in early 2025, momentum is now moderating with significant headwinds ahead, particularly for US manufacturers grappling with tariff increases.
According to the OECD’s September 2025 Interim Economic Outlook, global GDP growth is projected to weaken from 3.3% in 2024 to 3.2% in 2025 and further decline to 2.9% in 2026. The United States faces an even steeper decline, with annual GDP growth expected to drop from 2.8% in 2024 to 1.8% in 2025 and 1.5% in 2026, with tariffs cited by the organization as a leading cause. Inflation, however, could be trending downward.
“Inflation in most G20 economies is projected to fall as economic growth and labour markets continue to soften,” the OECD wrote in its report. “Headline inflation is expected to decline from 3.4% in 2025 to 2.9% in 2026, while core inflation in advanced G20 economies remains broadly stable, easing only slightly from 2.6% to 2.5%.”
The OECD is an international organization with 38 member countries, including the US, that promotes economic growth through economic and policy analysis. It works to establish evidence-based international standards.
Economic speedbumps & headwinds
In its report, the OECD noted that the impacts of higher tariff rates are yet to be fully felt in the US economy. The group anticipates the US as well as global economies will slow in the coming months, primarily the result of tariffs.
“This reflects a combination of factors, with firms making use of inventories and ample profit margins to avoid or absorb the initial impact of higher tariffs, lags between the announcement and imposition of higher tariff rates, and the exemption of goods already in transit from higher tariff rates,” the organization wrote in its report.
For the plastics industry specifically, the recent termination of PET and recycled PET exemptions from reciprocal tariffs on Sept. 8, 2025, has further complicated the landscape.
The Association of Plastic Recyclers (APR) issued a statement on Sept. 11, 2025, addressing the potential impacts of the changing tariff landscape on the industry, particularly regarding these exemption changes.
“US PET recyclers are under heavy pressure from a surge of low-cost imported material and an oversupply of virgin plastic — pressures compounded by brands abandoning recycled content commitments in favor of virgin plastic and choosing imported rPET rather than sourcing from domestic recyclers,” the organization said in its statement. “APR will continue to work with state and federal policymakers to create further incentives for brands and manufacturers to use recycled plastics sourced from North American programs to ensure that US recycling capacity grows and delivers on its promise to reduce plastic pollution and curb the production of new plastic.”
The OECD noted in its report that downside risks loom large over the global economy. Additional tariff hikes, increased concerns about fiscal risks, and renewed inflation pressures could weigh heavily on growth prospects. Financial market repricing, including of volatile crypto-assets, could pose additional financial stability concerns.
“On the upside, easing trade restrictions or faster advances in AI could support stronger outcomes,” the OECD wrote.
Tariffs having ripple effect
The full impact of tariff increases is still developing, with many measures being introduced gradually and firms initially absorbing some costs through their profit margins. Nevertheless, the effects of higher tariffs are becoming increasingly evident across global markets.
During the Plastics Industry Association‘s (PLASTICS) 2025 Size & Impact Executive Briefing last week, Perc Pineda, PhD, chief economist of the organization, explained that trade policies remain an issue, noting that many tariffs implemented by the Trump administration aren’t sustainable long-term.
“We started with very high reciprocal rate tariffs, but after trade deals, trade talks, and trade negotiations, they have actually come down,” he said, predicting additional trade negotiations would likely occur in 2026 with positive outcomes for the plastics industry.
Section 232 tariffs have created significant uncertainty throughout the plastics sector. In August, the Bureau of Industry and Security within the US Department of Commerce expanded these steel and aluminum tariffs by adding 407 Harmonized Tariff Schedule codes to the derivative products list, affecting goods across consumer, household, industrial, transportation, chemical, energy, and infrastructure sectors — all intersecting with the plastics industry value chain.
Labor markets softening?
Labor markets are showing signs of softening across several economies, with higher unemployment rates and fewer job openings, the OECD reported. Simultaneously, the disinflation process has stalled in many regions as food prices rose and services inflation remained persistent.
The OECD added in its report that policymakers face several critical challenges in this environment. Economic experts recommend promoting transparency and predictability in trade policy, with countries cooperating to ease trade tensions while addressing economic security concerns. Central banks are advised to remain vigilant, reacting promptly to shifting risks to price stability.
Where inflation expectations are well anchored and underlying inflation is projected to ease towards target, gradual policy rate reductions should continue. Maintaining central bank independence would preserve policy credibility and limit inflation volatility and persistence.
Fiscal discipline is equally important to safeguard longer-term public debt sustainability and preserve the capacity to respond to future shocks. Credible medium-term adjustment paths, combining stronger efforts to contain and reallocate spending with measures to enhance revenues, are key to stabilizing debt burdens.
Finally, enhanced structural reform efforts — particularly regarding competition, barriers to entry, and skills policies — are needed to deliver lasting improvements in living standards and harness the potential gains of new technologies such as artificial intelligence.
As the global economy navigates these challenging waters, the interplay between trade policies, monetary adjustments, and structural reforms will determine how effectively nations can maintain growth while managing the transition to a more restricted trade environment.
The OECD report noted that tariff costs already are being passed down to consumers through higher prices, especially durable goods with a high import content. Uncertainty with tariffs and trade is likely to remain a concern through the end of 2025, and likely into next year, especially considering the Supreme Court isn’t slated to hear a case on the legality of the tariffs until November.