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Numbers in Perspective

Perc Pineda, Ph.D., Chief Economist, Plastics Industry Association

The Gardner Business Index (GBI) for January rose for the second consecutive month to 48.6%, suggesting early signs of optimism. The GBI for plastics processing also increased to 48.6%, nearing the growth threshold of 50, with new orders ticking up.

While the U.S. economy grew by a solid 2.8% in 2024, sectoral imbalances persisted. Strength in financial and service sectors have masked slowdowns in housing and manufacturing. The outlook for plastics manufacturing has improved, driven by potential regulatory shifts, including the reversal of prior plastic bans. Trade policies are also evolving.

As of this writing, the 25% tariffs on imports from Mexico and Canada — the U.S. plastics industry's top two export markets — have been delayed for 30 days, leaving room for further negotiations, perhaps, under the existing free trade agreement. Meanwhile, the 10% tariff on imports from China, the industry’s third-largest export market, took effect on February 4. Higher tariffs could trigger short-term retaliation and medium-term trade diversion, impacting U.S. plastics manufacturers and downstream users of imported plastic components.

About 12% of U.S. plastic products shipments are exported, limiting exposure to tariff retaliation. However, a $15.3 billion plastic products trade deficit with China in 2023 highlights broader challenges.

Despite uncertainty in trade policy, the latest GBI data suggests a shift toward growth for plastics manufacturing. In December, the capacity utilization rate in plastic and rubber products manufacturing stood at 71.4%, indicating the U.S. plastics industry is positioned to expand production.