We use an advanced model of the global economy to consider a set of scenarios consistent with the proposal to impose a minimum 60% tariff against Chinese imports and blanket minimum 10% tariff against all other US imports. The model’s structure, which includes imperfect competition in increasing-returns industries, is documented in Balistreri, Böhringer, and Rutherford (2024). The basis for the tariff rates is a proposal from former President Donald Trump. We consider these scenarios with and without symmetric retaliation by our trade partners. Our central finding is that a global trade war between the United States and the rest of the world at these tariff rates would cost the US economy over $910 billion at a global efficiency loss of $360 billion. Thus, on net, US trade partners gain $550 billion. Canada is the only other country that loses from a US go-it-alone trade war because of its exceptionally close trade relationship with the United States.

We provide context in terms of the current trade conflict, primarily between the United States and China, and enumerate a set of scenarios based on the proposed blanket tariffs. Results suggest the United States is the biggest loser in a comprehensive trade war with the rest of the world. We also consider a potential transatlantic alliance, where Europe joins the United States in tariffs against China. Transatlantic cooperation reduces US losses and leads to sharp losses for China, highlighting the benefits of cooperation relative to the proposed go-it-alone strategy.

State of Play

The 2018 US-China trade war was a major economic conflict initiated by the United States that targeted alleged unfair trade practices by China, such as intellectual property theft, forced technology transfers, industrial subsidies, and currency manipulation. The conflict escalated through rounds of tariff impositions, retaliatory measures, and negotiations, significantly affecting global markets and supply chains.

The United States imposed tariffs on over $250 billion worth of Chinese goods, targeting industries like technology, machinery, and consumer products. China responded with tariffs on about $110 billion of US goods, affecting agriculture, automobiles, and other sectors.

Multiple rounds of negotiations occurred between 2018 and 2019. The two countries reached a temporary truce with the “Phase One” trade deal in January 2020, where China agreed to purchase more US goods, particularly agricultural products, and address some intellectual property concerns. China did not, however, meet any of the additional purchase commitments. China made some progress toward greater intellectual property protection in certain areas yet continues to tolerate flagrant intellectual property theft in others. Both economies have suffered from reduced market access and higher costs for businesses and consumers. The conflict also disrupted global supply chains, particularly in consumer technology products, and hit US farmers hard due to China’s retaliatory tariffs.

Also, in 2018 the United States imposed a 25% tariff on steel and a 10% tariff on aluminum imports, affecting a wide range of countries, including EU members, South Korea, and Japan. The US administration justified the tariffs on the grounds that a robust domestic steel and aluminum industry was necessary to ensure the availability of critical materials for defense and infrastructure projects despite a memorandum from the Secretary of Defense stating that the “[Department of Defense (DoD)] does not believe that [steel and aluminum imports] impact the ability of DoD programs to acquire the steel and aluminum necessary to meet national defense requirements”.

The steel and aluminum tariffs sparked significant backlash, leading to retaliatory tariffs by several countries. Eventually, the United States negotiated managed trade deals with some countries, such as Canada, Mexico, and the EU. Australia escaped relatively unscathed, but other 3 countries were forced to negotiate exemptions or quota systems, such as South Korea, Brazil, and Argentina.

The tariffs increased costs for US manufacturers that rely on imported steel and aluminum, leading to higher prices for US manufacturers, and consumer goods like cars and appliances. US steel and aluminum producers saw benefits in terms of higher domestic prices. The overall effect on jobs was mixed, with some gains in the metal industries but larger losses in sectors reliant on metal imports and in the sectors that were targets of retaliation, namely US agriculture.

In sum, the 2018 trade war generated losses for China and the US economy. The Biden-Harris administration kept the punitive tariffs on China and the steel and aluminum (national-security) tariffs in place, which remains a point of contention in US trade policy.

Recent proposals

In 2024, during his campaign for a second term, former President Donald Trump proposed imposing a 60% tariff against imports from China and a 10% tariff against imports from everyone else in an apparent effort to increase the number of manufacturing jobs in the United States and boost domestic industries. Most economists would agree that tariffs at this scale will backfire by undermining US economic performance.

Results

The results show both the United States and China suffer losses from the 2018 tariffs, with US losses equivalent to $81.3 billion and $63.3 billion for China. Imposing a 60% tariff on China and 10% tariff on everyone else unequivocally leads to additional losses for the United States. As a technical note, the economic model evaluates policies based on changes in household welfare, so we can interpret the $81.3 billion loss for the United States as the dollar value of the extra consumption that private households could have had in the absence of the tariffs.

United States

Specifically, with a 60% tariff on China, US losses grow to $560.7 billion; and, if China retaliates, US losses are $665.4 billion. If the United States were to impose the 60% tariff on China and a 10% tariff on everyone else, US losses are $511.0 billion; and, if everyone retaliates in kind, US losses grow to a shocking $911.8 billion.

China

China suffers across almost all scenarios, and China’s losses are greatest when the United States and EU cooperate. Specifically, if the United States were to impose the 60% tariff on China, China’s estimated losses are equivalent to $70.6 billion. But if China retaliates, their losses reduce to $50 billion because the retaliation shifts the terms-of-trade in their favor. As with any large country, tariffs increase export prices relative to (net-of-tariff) import prices. If the United States were to impose the 10% tariff on other countries, China’s losses shrink to $26.2 billion, reflecting a further improvement in the terms of trade as European and other goods become relatively less expensive due to less US demand. When everyone retaliates against the United States, the closest scenario here to a US-led go-it-alone global trade war, China actually gains $38.2 billion. As discussed in the introduction, a global trade war between the United States and the rest of the world creates significant opportunities for China in terms of new export opportunities in Europe and less expensive non-US imports. China suffers the most when the United States and EU cooperate. Specifically, welfare losses for China are between $26.2 billion and $70.6 billion when the US pursues a go-it-alone strategy. When the United States and EU cooperate, China’s welfare losses reach $261.3 billion to $464.1 billion.

European Union

The EU economy gains from the US-led trade wars mostly because of trade diversion. That is, with the United States and China imposing tariffs on each other, the EU has greater access to lower priced imports from China, and effectively gets preferential treatment for its goods in both the US and Chinese markets. The EU benefits the most ($234.6 billion) when they let the United States go it alone, under the “ALL6010” scenario. In that scenario, the United States imposes tariffs against China and all other countries, and everyone retaliates in kind against the United States, which is the closest scenario to a US-led global trade war. EU importers benefit from lower prices and EU exporters benefit from greater preferential market access.

Other countries

Other countries such as Canada, Mexico, South Korea, and the rest of the world mostly experience net gains from a US-China trade war. Canada and Mexico, however, experience losses when the United States imposes 10% tariffs on all other countries and they retaliate in kind, reflecting the tightly knitted supply chains across North America.

Specifically, Canada and Mexico experience a loss when the United States imposes tariffs on China and all other countries. When other countries retaliate, Mexico goes back to a net gain while Canada continues at a loss. This is attributed to the fact that, although both Mexico and Canada have strong ties to US markets, Canada’s trade with the United States is biased toward increasing-returns-to-scale sectors. In this regard, shrinking trade between the United States and Canada implies a greater cost for Canada. South Korea and other OECD countries gain from the US-China trade war scenarios—South Korea’s net gains reach $48.9 billion

US-EU Cooperation

Transatlantic cooperation on tariffs against China, as a punitive measure for intellectual-property violations and other unfair-trade practices, are more effective in terms of greater losses for China and easing the burden on the United States. Specifically, if the United States and EU were to cooperate and impose tariffs against China simultaneously, with the United States imposing 60% tariffs and the EU imposing a minimum of 25% tariffs, US losses reduce to $435.6 billion and China’s losses increase to $261.3 billion. If China retaliates against the United States and EU in kind, US losses remain mostly the same, but China’s losses increase to $464.1 billion.

EU cooperation, however, comes at a cost for the EU’s economy. The EU goes from a $234.6 billion gain (in “ALL6010”) to a $77.8–$103.8 billion gain in the cooperation scenarios.

These results highlight three important nuances of US-EU cooperation: (a) securing EU cooperation eases US economic losses from the trade wars; (b) US-EU cooperation sharply increases the net losses to the Chinese economy; and, (c) cooperating with the United States comes at a cost for the EU and reduces their net gains from the trade wars.

Conclusion

In conclusion, the analysis presented here reveals that escalating US tariffs, particularly the proposed 60% tariff against China and 10% tariff against all other trade partners, would impose substantial economic costs on the United States. We show that while China and other US trade partners may experience some losses, the United States would bear most of the global efficiency cost, with potential economic losses surpassing $910 billion if all countries retaliate. Interestingly, many of the US’s trading partners, including the EU, South Korea, and other OECD countries, stand to benefit from trade diversion as US goods become less competitive globally

The findings further underscore that transatlantic cooperation in imposing tariffs against China would mitigate some of the US’s losses while amplifying the economic pain for China. This cooperation comes at a cost, however, for the EU in terms of the forgone benefits of letting the United States go it alone. Overall, the results highlight the complexities and far-reaching consequences of a “fortress America” protectionist trade policy, where, in the context of a global trade war, the United States stands to lose the most, both in terms of economic welfare and global competitiveness.

To read the article as it was published on the Yeutter Institute webpage, click here.

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The global issue of deforestation and its environmental consequences stand at the forefront of Brazil’s agenda as it directs a critical crossroads. In this context, the Brazilian Ecological Transition Plan, an initiative by the Ministry of Economy, emerges as a vital step towards positioning Brazil as a leader in sustainability and environmental responsibility. This plan, currently in progress, addresses urgent ecological challenges and sets the course for a more sustainable and resilient future.

However, Brazil’s path towards sustainability faces challenges, particularly concerning the EU-Mercosur Agreement. This agreement, designed at bolstering cooperation and economic growth, has been met with concerns. Increased trade in agricultural products between Mercosur countries and the EU could potentially aggravate deforestation, raising questions about the compatibility of the agreement with environmental goals.

Therefore, International Law serves as a guiding force in promoting responsible environmental practices. The interrelation of ecosystems transcends national boundaries, necessitating collaborative efforts among countries to mitigate environmental degradation. In this context, Brazil’s ambitious plan aligns with the principles outlined in international agreements such as the Paris Agreement. By adhering to these agreements, Brazil can signal its commitment to global efforts to combat climate change.

As negotiations proceed, finding common ground on environmental commitments is essential for successful ratification and the realization of mutual benefits. Brazil’s Ecological Transition Plan and the EU-Mercosur Agreement offer opportunities to demonstrate global responsibility and sustainability. By navigating these challenges, Brazil can emerge as a steward of the environment, contributing to a greener, more sustainable future.

Context

The Brazilian Ecological Transition Plan, announced by the Ministry of Economy, represents an initiative that seeks to position Brazil as a global leader in sustainability and environmental responsibility. This plan is still in progress and is set to tackle pressing ecological challenges and pave the way for a more sustainable and resilient future.

The Ecological Transition Plan, consisting of six major pillars, presents a comprehensive approach to address key environmental concerns in Brazil. These pillars include sustainable finance, technological densification, bioeconomy, energy transition, circular economy, and climate adaptation infrastructure. Each pillar aims to tackle critical challenges and foster a more sustainable and environmentally responsible future for the country.

The Plan also encompasses a wide range of measures to address key environmental concerns in Brazil. It includes initiatives such as establishing a regulated carbon market, implementing carbon taxes, and launching sustainable bonds to promote sustainable finance. In addition, the plan emphasizes a circular economy model that promotes resource efficiency, waste reduction, and innovation.

The implementation of the Ecological Transition Plan will be executed over the course of President Luiz Inácio Lula da Silva’s period, with some initiatives already starting this semester. Therefore, it is a testament to the government’s commitment to embracing sustainability and transitioning towards a greener and more ecologically responsible economy.

EU-Mercosur Agreement in the Context of Brazil

The EU-Mercosur Trade Agreement stands as a testament to the strengthening ties between the European Union and the Mercosur states, which include Argentina, Brazil, Paraguay, and Uruguay. This landmark agreement was politically finalized on 28 June 2019, marking a significant step towards fostering mutual growth, sustainable development, and increased trade and investment between the two regions.

Key components of the agreement include the reduction or elimination of tariffs on various goods and services, improved access to government procurement opportunities, protection of intellectual property rights, and facilitation of investment flows. By streamlining trade procedures and reducing barriers, the agreement aims to boost economic growth and create new opportunities for businesses in both the EU and Mercosur countries.

The agreement holds strategic importance for both parties. For the EU, it represents an opportunity to expand its market access in the dynamic economies of the Mercosur bloc and gain a competitive edge in sectors like machinery, chemicals, and automotive. On the other hand, Mercosur countries, especially Brazil, stand to benefit from increased export opportunities for their agricultural products, such as beef, soybeans, and poultry, which are vital components of their economies.

From Deforestation to Protection

The EU-Mercosur agreement, while aimed at fostering economic cooperation and trade between the two regions, has been marred by significant concerns surrounding logging in recent years in Brazil. Due to the intensified trade in agricultural commodities, from Brazil to the EU, there is a threat of deforestation being exacerbated. The expansion of agribusiness and the demand for these products could lead to further devastation, as agricultural land is cleared to meet the export demands.

In response to the growing concerns, the EU has sought to impose environmental requirements on Mercosur countries, including Brazil, to ensure adherence to sustainable practices and the Paris Agreement’s environmental goals. However, Brazil has been resistant to these proposals, raising concerns about the agreement’s compatibility with climate and environmental objectives.

Nonetheless, a striking contradiction reveals itself when inspecting the EU’s stance on deforestation. While the EU actively urges Mercosur nations to halt deforestation and embrace sustainable measures, it concurrently remains a potent catalyst for this very degradation due to its robust appetite for agricultural imports. Products like Brazilian soybeans and beef, in high demand in European markets, are frequently associated with the expansive clearing of forests for cultivation.

The EU’s consumption habits, marked by their significant imports, inadvertently fuel the deforestation they are keen to diminish. This juxtaposition not only muddies the agreement’s narrative but also casts a shadow on the EU’s true dedication to sustainability, given their prevailing consumption patterns.

As described by Knox in his exploration of “Imperialism, Hypocrisy and the Politics of International Law,” the contradictions and accusations of hypocrisy are not mere anomalies but rather intrinsic facets of international relations and policy-making. This framework can be aptly applied to the EU’s stance on deforestation. 

While on one hand, the EU guardian environmental sustainability and urges Mercosur nations to halt deforestation, its consumption patterns reveal a contrasting narrative. This duality in the EU’s actions mirrors the broader theme Knox emphasizes: the tension between proclaimed values and actual practices in the realm of international law and relations. 

Additionally, President Luiz Inácio Lula da Silva’s recent speech at the Power Our Planet event in Paris served as a poignant reminder of the complex interplay between environmental responsibility, global consumption, and historical accountability. With resounding applause, Lula stated, “It is not the African people who pollute the world, it is not the Latin American people who pollute the world… they must pay the historical debt they have with planet Earth.” These words resonate as an echo of the concerns arising from the EU’s demand on Brazil to address deforestation while European consumption drives it.

With the return of Luiz Inácio Lula da Silva to the presidency, there has been a significant shift in Brazil’s approach to the Amazon. Data from various sources indicate a substantial decline in deforestation rates since Lula assumed office. According to government satellite data, deforestation in the Amazon dropped by 33.6% during the first six months of Lula’s term. This decline is even more noteworthy when compared to the same period in the previous year.

Several factors contribute to this positive trend. The new administration has emphasized the importance of environmental conservation and has taken proactive measures to protect the Amazon. The government’s efforts, combined with international pressure and increased global awareness about Amazon’s significance, have played a critical role in this decline.

Challenges and Perspectives

The EU-Mercosur Agreement has faced several complications in the ratification process. Some EU member states have expressed objections regarding the environmental aspects of the deal. As of the current context, the agreement remains pending final approval and ratification from all the EU member states.

However, the European Commission President, Ursula von der Leyen, is determined to conclude the long-delayed trade deal between the European Union (EU) and Mercosur countries. With the geopolitical landscape evolving, the EU recognizes the importance of strengthening ties with Latin America and is eager to avoid neglecting the region any further.

During her tour of Latin American countries, von der Leyen, alongside Brazilian President Luiz Inacio Lula da Silva, emphasized the urgency of accelerating negotiations and finalizing the EU-Mercosur agreement. Both leaders expressed their ambition to reach a conclusion as soon as possible, aiming to achieve this milestone by the end of the year.

Nevertheless, even though both European and South American leaders are excited to sign the agreement and tout its potential benefits, authors such as Jason Hickel present a thought-provoking perspective that challenges the conventional notion of sustainable economic growth. 

His argument centers on the assertion that the pursuit of never-ending economic expansion is incompatible with the finite nature of Earth’s resources and the urgent need to mitigate environmental crises. According to this view, achieving genuine sustainability requires more than mere tweaks to existing systems—it demands a profound reevaluation of our societal values and consumption patterns.

At the heart of this perspective is the notion that true environmental resilience necessitates a departure from the relentless cycle of production and consumption that has characterized modern economies. Proponents of this viewpoint argue that focusing solely on increasing GDP and material accumulation exacerbates resource depletion, pollution, and ecological degradation. Instead, they suggest that by reining in production and consumption, we can reduce our collective ecological footprint, allowing ecosystems to regenerate and reducing the strain on vital resources.

The idea isn’t to strip away comforts or advancements, but rather to challenge the prevailing assumption that continual material accumulation equates to progress. By reimagining prosperity and embracing a more holistic perspective, societies can allocate resources more efficiently, reduce waste, and cultivate lifestyles that are both environmentally regenerative and personally fulfilling.

To address the pressing environmental crises, the reevaluation of growth becomes imperative. The view that sustainable economic growth is an oxymoron suggests that we must be willing to question the status quo and explore alternative pathways that prioritize harmony with the planet over unchecked expansion. This approach invites us to consider innovative economic models that prioritize well-being, foster resource equity, and champion ecological restoration.

Despite these issues, analysts remain optimistic about the agreement’s prospects. Trade between the EU and Mercosur countries has been steadily growing over the past two decades, even without a formal agreement. The conclusion of the EU-Mercosur agreement holds immense potential for enhancing trade, economic collaboration, and sustainability between the regions. As the negotiations progress, finding common ground on environmental commitments will be crucial in securing the deal’s successful ratification and realizing the mutual benefits for all parties involved.

Conclusion

The discourse surrounding Brazil’s Ecological Transition Plan, the EU-Mercosur Agreement, and global environmental concerns reveals a nexus of economic interests, sustainability goals, and geopolitical maneuvers. Brazil’s commendable efforts to position itself as an environmental steward are evident in its Ecological Transition Plan, aiming for a sustainable and resilient future. Also, the return of Luiz Inácio Lula da Silva to Brazil’s presidency signals a promising shift in environmental protection, supported by data indicating a reduction in deforestation.

Yet, challenges arise in aligning these intentions with the potential environmental implications of the EU-Mercosur Agreement, especially concerning deforestation. While the EU demands sustainable measures from Mercosur countries, notably Brazil, there exists a dichotomy in its actions, evident in the consumption habits that inadvertently spur deforestation. This discrepancy, exemplified through the EU’s simultaneous advocacy for environmental preservation and its consumption patterns, underscores the complex dynamics of international relations, as highlighted by Knox’s insights.

The arguments presented by thinkers like Jason Hickel provide an alternate perspective, suggesting that true sustainability might necessitate a departure from the traditional economic growth paradigm. Instead, a reconceptualization of prosperity, pivoting towards ecological harmony and well-being, might be the path forward.

The current global landscape, characterized by a heightened awareness of climate change and its ramifications, offers an unprecedented opportunity. Nevertheless, this shared vision for a prosperous and sustainable future requires not just agreements on paper but real-world actions, informed policymaking, and a steadfast commitment from all participants. 

Furthermore, as nations come together in this effort, they also have a single opportunity to lead by example. By successfully navigating these challenges, Brazil, the EU, and Mercosur nations could set a precedent for the world – illustrating how global collaborations can be rooted in both economic ambitions and an unwavering dedication to the environment. The path ahead may be complex, but with unity, innovation, and a shared ethos, they can illuminate the route for others, showcasing a harmonious blend of progress and preservation.

Pedro Serodio holds an LL.M in International and European Law at the Universität des Saarlandes and a Legal Assistant at MarketVector Indexes, in Frankfurt am Main, Germany

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This research paper has been written with the express intention of contributing ideas to this emerging SDG reset, both at forthcoming events in the autumn of 2024 – most notably, the UN’s Summit of the Future – and in continuing discussions into 2025 and beyond. We make the case for accelerating and deepening the shift to circular economic models, taking into account the potential trade-offs and unintended consequences that disruptive innovations may bring. The paper underlines the vital role that expansion of the circular economy could play in supporting the SDGs and in shaping what comes after them. On the latter, specifically, we present a policy blueprint for development of the circular economy to 2050.

At the heart of our argument is the idea that the circular economy and the SDGs are naturally complementary. Prominence in the SDG framework could help the circular economy to reach a critical scale and breadth, which in turn would improve prospects for achieving many of the SDGs’ targets. Linking the two offers mutual benefits. The circular economy needs the imprimatur of the UN system and other multilateral institutions to establish itself globally. At the
same time, the circular economy offers the prospect of vastly more effective action on the triple planetary crisis of pollution, climate change and biodiversity loss – precisely the sort of catalyst the UN’s ailing 2030 Agenda for Sustainable Development could use.

A ‘circular economy’ can be thought of as a system designed to deliver social and economic prosperity without requiring unsustainable levels of raw material extraction, consumption or pollution. In simplified terms, a circular economy combines three design principles: eliminating waste and pollution; extending the lifetime of products and materials for as long as possible; and regenerating natural systems. It can entail many different types of activity – ecodesign of goods, ‘product-as-a-service’ alternatives to product ownership, regenerative and restorative farming, and the use of refurbished and second-hand goods are just a few examples. Achieving a circular economy is not simply about recycling more: it requires reorienting and redesigning the fundamental goals and structures of societal provisioning systems (food, transport, energy, shelter) in ways that dramatically reduce raw material and energy consumption.

The story of the circular economy so far has often been one of modest ambition, localized initiatives, and small-scale or experimental projects implemented incoherently.

A robust scientific literature underlines the advantages of circular economic models over today’s predominantly extractive, resource-intensive ones (often described as ‘linear’ by researchers). By some estimates, moving to a circular economy could unlock up to $1.5 trillion in value in just three sectors of the US economy alone. It could help achieve 45 per cent of the global greenhouse gas emissions reductions needed to mitigate climate change by transforming the way products and materials are made and used. It could also restore global biodiversity to its 2000 levels within little more than a decade. Yet without introduction of the circular economy at scale, in contrast, resource consumption could increase by 60 per cent from 2020 levels by 2060, while over half of the 169 targets within the 17 SDGs may be unachievable. Put another way, the circular economy is becoming too important for policymakers to ignore, all the more so amid mounting concerns about rising global temperatures, the lack of progress on the SDGs, and the world’s failure to meet many environmental targets.

Yet the story of the circular economy so far has often been one of modest ambition, localized initiatives, and small-scale or experimental projects implemented incoherently. As we argue in this paper, the circular economy needs to be both scaled up and globally coordinated. One of the most basic challenges is that not enough circular economy activity is going on: according to one estimate, the global economy is just 7.2 per cent ‘circular’, if measured by the percentage of secondary (i.e. cycled) materials it consumes. A second problem is the lack of dedicated institutional representation. Whereas the UN Framework Convention on Climate Change (UNFCCC) exists for global climate policy coordination, and the International Energy Agency (IEA) provides a coordinating structure for the energy sector, no equivalent exists for the circular economy. What is needed is a kind of IEA for the circular economy, so to speak: a multilateral body that can champion the circular economy with policymakers and in the UN system, and that can coordinate policy, regulation and standards.

A third problem, partly stemming from the above, is that action on the circular economy remains fragmented at a global level. All countries depend to varying degrees on foreign trade for the materials, goods and services associated with circular activities. Equally, ‘ecodesign’ standards requiring products to meet strict circularity criteria will affect global supply chains, with implications potentially beyond the jurisdictions where such standards are enacted. However, the basic interconnectedness of the circular economy is not fully reflected in policy. More than 75 national circular economy action plans, roadmaps and strategies have been launched to date (another 14 are in development). These documents have been drafted unilaterally by the countries in question, resulting in a kaleidoscope of around 3,000 rapidly evolving commitments spanning 135 policy areas and 17 sectors. While the amount of activity is a positive sign of rising interest in the circular economy, fragmentation of its operating and regulatory environments risks increasing barriers to trade (for example, when regulations on the export of industrial waste or recycled electronics are incompatible between one country and another).

A fourth concern is that current government practice on the circular economy risks encouraging counterproductive resource nationalism and zero-sum economic competition, hurting resource-poor developing countries in particular and undermining the SDGs. In some cases, the national action plans and roadmaps mentioned above have narrow domestic goals, such as boosting competitiveness against trade partners, supporting the (often politically motivated) reshoring of industry and jobs, and reducing dependence on imported critical materials. Trends towards deglobalization and nationalism increase the temptation for governments to treat the circular economy as an opportunity to assert, or contest, control over supplies of critical raw materials.

Summary of recommendations

To address these challenges, this paper proposes solutions and ideas in two parts. The first part covers the period to 2030, the UN’s currently envisioned deadline for achieving the SDGs. The second focuses on 2030–50, a period during which the SDGs may be extended (most likely in modified form) or replaced with new goals as part of a refreshed sustainable development agenda.

In terms of immediate action on salvaging the SDGs between now and 2030, we have identified five priority areas for international collaboration on the circular economy. These proposed actions draw on input from stakeholder workshops and consultations with participants from Africa, Asia, Europe and Latin America, and are intended for a varied audience of multilateral institutions, governments and businesses. With the 2030 SDG deadline approaching, work on implementing these recommendations would need to begin immediately.

The five priorities are as follows:

1. Embed principles of justice and inclusivity in circular economy development.

This is more than a moral imperative; it is a pragmatic necessity both for engagement with the UN system, where such values already underpin the SDGs, and for achieving political and popular support around the world for the economic reforms implied by the circular economy. Key tasks include rectifying environmental injustices such as illegal dumping of waste in low- and middle-income countries, providing decent work and meaningful employment, and consulting a wide range of countries and stakeholders on the design of circular economy policies. Other recommendations include establishing UN guidelines on social equity in the circular economy; setting up a platform under the UN’s Economic and Social Council (ECOSOC) to facilitate sharing of expertise and best practices of Indigenous communities; and launching a global information campaign on the benefits of the circular economy.

2. Enhance global policy coordination on the circular economy.

A multilateral or intergovernmental policy coordination mechanism is needed to help governments develop and implement national circular economy roadmaps. One option would be to establish a cross-sectoral circular economy alliance between UN development agencies. Such an alliance could work with national governments, multilateral development banks (MDBs), the private sector and civil society to offer guidelines, best-practice examples and technical knowledge. The Global Alliance on Circular Economy and Resource Efficiency (GACERE) – which currently consists of just 16 countries plus the EU – could conceivably be repurposed and expanded for this role. Another option would be to set up an international resource agency, akin to the International Energy Agency (IEA) in some respects but with a mandate specific to material resources and the circular economy. Additionally, the G7 and G20 should be encouraged to increase their ambition on the circular economy and to align policy in areas such as product and producer standards. International coordination between environmental agendas could also be improved by applying circular economy principles to achieve the targets set in multilateral environmental agreements such as the Convention on Biological Diversity and the Paris Agreement on climate change.

3. Reform the global financial architecture.

Scaling up the circular economy will require significant investment. At present, the circular economy is poorly integrated into the global financial architecture, and thus largely off the radar of many investors or perceived as too risky. Creating a circular economy-specific framework for international financial institutions could facilitate development of investment taxonomies, financial benchmarks and technical criteria that would underpin the funding of projects, technologies and business models at scale. Multilateral development finance – though historically focused on ‘linear’ economic models – also has a role to play in de-risking circular economy investments. The ongoing reform of MDBs presents an opportunity to embed circularity principles in international public finance. Most fundamentally, MDBs will need to increase their lending capacity and adjust their mandates to allow the financing of global public goods. A Global Circular Economy Fund, financed through public sources and modelled on the Green Climate Fund, could also be set up to mobilize private capital, concentrating on low- and middle-income countries that might otherwise struggle to attract financing for their circular economy transitions.

4. Rewire the global trade system.

Changes in policy and regulation are needed to support circular economy-enabling trade while preventing problems such as the illegal dumping of waste and trade in goods that inhibit the circular economy. Reconfiguring global supply chains to be circular in nature will require policies and regulations to streamline trade in many kinds of goods and services, including: remanufacturing and recycling equipment; second-hand goods; secondary raw materials; non-hazardous scrap and industrial residues; and design, rental and repair services. ‘Trusted circular trader’ schemes could be established to reduce red tape, pre-certifying circular economy-compliant exporters. ‘Resource recovery lanes’ similar to customs green lanes could expedite documentation for shipments of secondary raw materials. Technical cooperation to make circular trade compatible with the World Customs Organization’s Harmonized System (HS) codes is also needed. Finally, the informal circular economy working group hosted by the WTO’s Trade and Environmental Sustainability Structured Discussions (TESSD) would benefit from more formal status.

5. Develop shared standards and metrics.

Common standards and metrics will be crucial to expanding the circular economy worldwide, and to reducing policy and regulatory fragmentation. In addition to supporting disclosures by businesses and organizations, new metrics will be needed for monitoring and reporting the circular economy’s aggregate impact on other multilateral environmental agreements, such as the Paris Agreement on climate change and the upcoming binding instrument to end plastic pollution by 2040. A circular economy-specific taxonomy of standards will need to cover many different areas, including product design, procurement, cleaner production, supply-chain transparency and traceability, and financial performance. The recent publication of the first tranche of ISO 59000 standards on the circular economy is a step forward, but micro, small and medium-sized enterprises (MSMEs) in particular may need support on compliance costs. The new voluntary Global Circularity Protocol (GCP), launched in 2023, could drive the development of universal metrics for assessing circularity.

After the SDGs – 2030 to 2050

Most of the SDGs will not be achieved by 2030. Only 17 per cent of the SDG targets are on track to be met globally by 2030. Some prominent voices propose that, instead of abandoning or replacing the SDGs, the UN should revise the current set of targets and extend the SDG framework to 2050. To provide ideas in this area, Chapter 4 presents an indicative, longer-term policy blueprint to be considered in the context of a possible extended or revised SDG framework post-2030.

Specifically, we propose a set of circularity targets in 17 categories for 2050, and corresponding levers and actions for achieving them. Each category of target is mapped to one of the 17 SDGs. For example, for SDG 1 (‘No poverty’), our proposed targets envisage the circular economy providing affordable basic services to the poor, and sustaining local businesses that can help make communities resilient to economic shocks and environmental disasters. For SDG 7 (‘Affordable and clean energy’), we propose actions that would enable societies to achieve full, affordable access to renewable and circular energy systems. Under this target, most critical materials would be supplied through secondary sources or substituted with alternative materials – highlighting the importance of circularity in ensuring that the resource demands of the energy transition are reduced as much as possible.

To enshrine circular economy principles more prominently in the next set of goals post-2030, we recommend several steps:

1. Introduce a specific high-level objective, within the extended post-2030 SDG framework, that recognizes the transformative potential of the circular economy for global development and for addressing the triple planetary crisis.

2. Explicitly outline ambitious but achievable global targets related to reducing unsustainable resource use, reducing global waste generation, and enhancing circularity rates for key resources and materials.

3. Ensure that circular economy targets are integrated across all SDGs, emphasizing the interconnectedness of sustainable resource management with economic, social and environmental objectives.

4. Align the post-2030 framework and circular economy targets with the ‘Beyond GDP’ initiative that forms part of the UN secretary-general’s ‘Our Common Agenda’ vision.

5. Develop clear, measurable indicators for inclusive circular economy practices with specific relevant targets for 2050.

To read the Research paper as it was published on the Chatham webpage, click here.

To read the full Research paper, click here.

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Over the past five years, global shifts have reshaped the world. China’s rise, US-China tensions, COVID-19, and Russia’s 2022 invasion of Ukraine exposed supply chain vulnerabilities, pushing resilience to the top of the agenda. Latin America and the Caribbean (LAC) can seize the opportunity to provide solutions for US companies through nearshoring. With the most US bilateral free trade agreements, geographic proximity, and abundant critical minerals and forms of renewable energy, LAC is perfectly positioned to support the “China+1” strategy while also meeting environmental, social, and governance (ESG) standards. Estimates suggest nearshoring could add an annual US$78 billion in additional exports of goods and services in Latin America and the Caribbean in the near and medium term. Similarly, nearshoring could allow the US government and US companies to diversify supply sources and build resilient supply chains, while boosting inclusive economic growth in the region.

How can nearshoring be transformed from rhetoric to action? How can the United States and regional governments work together to materialize nearshoring opportunities? How can the private sector be included in this endeavor? To answer these questions, the Atlantic Council created the Nearshoring Working Group, a multisectoral group of practitioners and experts from the United States and the region to help advance actionable policies to accelerate economic engagement across the hemisphere. Through numerous consultations with Nearshoring Working Group members and conversations with officials in the United States and across the region, this report identifies three overarching conditions that need to be met to materialize nearshoring, and suggests ten opportunities to achieve the three conditions.

Improving domestic “pull” factors

• Modernizing port and telecommunications infrastructure: Pursue modernization of port infrastructure to reduce transportation costs associated with nearshoring, and expand internet access.
• Improving “soft” infrastructure at border crossings: Leverage regulatory modernization and harmonization of customs processes to improve intraregional trade and coproduction.
• Offering reliable, clean energy sources: Create regulatory frameworks for renewable energies to reduce share of fossil fuel dependency, and update transmission lines to achieve reliable electricity.
• Providing legal certainty and fostering strong institutions: Offer predictable “rules of the game” for investors by strengthening independent regulatory agencies and pursuing digitalization of public services.

Unlocking US “push” factors

• Leveraging existing US trade policy toward the region: Work with partner countries to ensure provisions of current free trade agreements (FTAs) are best utilized in promoting nearshoring and supply chain resilience and sustainability.
• Tailoring development and investment policies to US strategic goals: Investment development policy must be tailored to US strategic goals, by lifting institutional constraints to International Development Finance Corporation (DFC) lending to LAC.
• Leveraging the existing toolbox across the US government: Include the breadth of US government programs and agencies as a tool of intragovernmental, bilateral engagements to catalyze nearshoring.

Enhancing public-private sector collaboration

• Strengthening workforce development: Closer collaboration between the public and private sectors is essential to close the skills gap between jobseekers and employers and improve the region’s human capital.
• Enhancing trade and investment promotion through multisectoral collaboration: Incorporate private-sector input in the decision-making process of investment promotion schemes such as investment promotion agencies (IPAs) and free trade zones (FTZs) to render both tools more effective.
• Supporting industries by following winners: Governments should provide incentives for winning industries to further grow, avoiding the draining of fiscal resources for industries that have yet to prove their yield.

To read the report as it was published on the Atlantic Council webpage, click here.

To read the full report, click here.

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The Report underlines that diversifying global value chains, reducing trade costs through digitalization, and transitioning to a low-carbon economy can create new opportunities for low- and middle-income economies. Furthermore, when trade policies are complemented by domestic measures, such as labour, education and competition policies, the gains from trade can more easily flow to workers and consumers. Enhanced WTO cooperation with other international organizations can magnify their combined action to increase inclusiveness across and within economies.

To read the report as it was published on the World Trade Organization webpage, click here.

To read the full report, click here.

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As the clean energy transition accelerates, critical minerals such as cobalt, lithium, and rare earth elements have become buzzwords in business, international relations, and sustainability.

Yet amid the scramble for these well-known resources, another metal – antimony – has quietly emerged as another keenly contested resource. With China’s recent announcement of export restrictions on this metal, the challenges of balancing supply and demand are intensifying, raising concerns over supply chain vulnerabilities and fuelling a new form of competition among great powers.

Antimony, a lustrous silvery-grey metalloid, is scarce in nature and unevenly distributed globally. It is, however, critical for producing high-tech and defence products, including flame-retardant materials, certain semiconductors, and superhard materials. As with many critical minerals, China dominates the global antimony supply chain. The country holds the world’s largest deposit, accounting for approximately 32% of global antimony resources, yet it produces more than 48% of global output.

China’s move to restrict the export of antimony, ostensibly to safeguard “national security and interests”, is set to take effect on 15 September. While these restrictions are not explicitly targeted at any specific country, the geopolitical implications are significant. China has gradually reduced its antimony production over the past few years to limit strategic stockpiling. As a result, the announcement has driven up prices, potentially disrupting global supply chains. The impact is particularly acute for the United States, which sourced 63% of its antimony imports from China.

China’s export control of this critical metal might appear a calculated move within the broader framework of resource nationalism. Beyond safeguarding strategic resources and preventing over-exploitation, these controls reinforce China’s leadership in the global antimony industry, enhancing its influence over the international allocation of this critical mineral. This move, thus, is not just about acquiring and protecting resources; it is also about denying rivals a strategic advantage.

Antimony is one of the few elements classified as a “critical” or “strategic” mineral by countries including the United States, China, Australia, and Russia, as well as the European Union, underscoring its special geopolitical value. Following similar restrictions on germanium, gallium, graphite, and rare earths, China’s export control of antimony marks another move to leverage its dominance in global supply chains. This action serves as a response to US efforts to limit the availability to China of critical technologies such as high-end chips .

China’s anitimony announcement has not gone unnoticed by markets. In Australia, the response has been notably positive. Larvotto Resources, a leading exploration and pre-development company focused on high-demand commodities including antimony, saw its share price surge as it possesses the rights to operate the Hillgrove Gold-Antimony Project, the eighth-largest in the world. The assumption is that Australia will fill the market gap left by China. In an effort to counter China’s dominance in critical mineral supply chains, the United States had forged partnerships with resource-rich countries including Australia.

However, China’s export restrictions target antimony oxides with a purity of 99.99% or higher, as well as other high-purity antimony compounds (99.999%). Producing such high-purity chemical compounds requires advanced processing technologies, and export controls with this high-purity threshold are likely aimed at restricting the export of high value-added antimony products and advanced processing technologies. These ultra-pure products are used in specialised industries, including high-end electronics, optics, and defence applications.

Australia’s ability to mitigate the risks associated with China’s dominance remains limited. China is a net importer of antimony metal. Currently, 86% of Australia’s antimony exports are sent to China for processing. Investing in processing capacity and infrastructure for lower-grade antimony products may offer limited strategic value for the United States, as these products will still be available under China’s restrictions. Conversely, developing high value-added processing technologies to produce high-purity antimony products carries significant risks, particularly if China decides to retaliate in trade or lift these restrictions. In the latter case, even if alternative processing technologies become available in Australia, the market – including the United States – may still turn to China for more cost-efficient products, potentially rendering Australia’s investments obsolete.

Navigating these dynamic complexities and maintaining an independent policy in the face of great power competition will be a true test of political acumen for Australian policymakers.

The competition over antimony is merely the latest manifestation in the great power rivalry that centres on technological supremacy. Each side is manoeuvring to secure critical materials and technologies, define future systems, and outpace the other in innovation.

The underlying issue is a deepening lack of trust between these global powers. This mistrust fuels the tug-of-war over resources, with nations viewing control over materials as crucial for maintaining technological dominance.

However, this relentless pursuit of supremacy comes with significant downsides: fragmented global supply chains, rising resource nationalism, and intensified trade restrictions. Cooperation gives way to competition, and technological progress risks becoming a zero-sum game.

To read the article as it was published on the The Interpreter webpage, click here.

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Critical raw materials (CRMs) are the bedrock of the world’s renewable energy systems. As economies around the world are committing to decarbonization, demand for critical minerals—the key components of clean technologies powering the green transition—is swiftly outpacing supply: the International Energy Agency (IEA) forecasts that the global energy sector’s requirements for energy transition minerals could quadruple by 2040. Confronted with growing competition for control over critical mineral supply chains, governments worldwide have implemented new policies, marshaled funding, and forged alliances to protect their access to these essential materials.

Although concerns over CRM supplies were raised as early as 2008, supply chain insecurities exposed during the Covid-19 pandemic and the challenges of reducing the EU’s energy dependencies in the aftermath of Russia’s invasion of Ukraine catapulted the issue of reliable access to energy transition minerals to the top of the EU’s political agenda.

The need to reduce dependencies on the EU’s access to CRMs figured prominently in Ursula von der Leyens political guidelines which were presented to the European Parliament on July 18th. She underscored the need to create a secondary market for CRMs, but also underlined that the EU need to diversify its supply and aggregate its demand as well as a need to boost European investment in the sector.

While we are still awaiting Mario Draghi’s report on the EU’s competitiveness, access to CRMs are also expected to be a central theme here. Speaking on April 16, 2024, Mario Draghi, the former president of the European Central Bank, thematized the urgency of securing Europe’s strategic autonomy in critical raw materials value chains. In a world where global superpowers such as the United States and China are turning to protectionist policies to shore up their CRM supply, the EU, Draghi underlined, needs “a comprehensive strategy covering all stages of the critical mineral supply chain.” 

The Critical Raw Materials Act (CRMA), which entered into force on May 23 of this year, is the EU’s initial attempt to build such a strategic approach. The regulation focuses on measures the EU can implement domestically to increase its raw materials resilience: ramping up extraction at home, increasing circularity and recycling efforts, and fostering innovation in alternative technologies. By 2030, 10% of all the EU’s annual consumption of strategic raw materials is to be extracted domestically and 40% is to be processed within the EU. At least 15% of the EU’s annual consumption is to come from recycled sources. According to observers, these targets set by the EU are widely ambitious and will most likely not be achieved by 2030.

The EU, however, will never be entirely self-sufficient in supplying the critical raw materials it requires and will always rely on CRM imports. Even in the best-case scenario where the CRMA’s goals are reached, 90% of the extraction and 60% of the processing of the EU’s yearly requirements will still occur overseas. Currently, geospatial concentration of supply chains leaves Europe’s critical raw material supply—and with it, Europe’s climate ambitions—vulnerable to supply disruptions, external shocks, and the tactics of trade wars.

For a handful of CRMs, the EU is almost solely dependent on a small number of third countries. For example, 98% of the EU’s supply of borate comes from Turkey and 63% of the world’s cobalt is extracted in the Democratic Republic of Congo (DRC). China’s stranglehold over global CRM extraction and, especially, refinement is a serious concern. For example, 100% of the rare earth elements used in permanent magnets are refined there. As the EU and US attempt to loosen China’s grip on CRM value chains, China is becoming more and more assertive in using its dominant position to defend its control of the market. In 2020, China ranked as the country with the most export restrictions on minerals, and, in 2023, introduced additional restrictions for graphite and for rare-earth mineral processing technology. Even the EU’s recently announced plans to impose tariffs on electric vehicles produced in China—an attempt to curb Chinese dominance at the downstream end of the critical mineral value chain—provoked Chinese authorities to open anti-dumping probes into European pork and French spirits in what was widely seen as a retaliatory response.

To secure a reliable CRM supply, the EU must reduce these dependencies. Thus, the CRMA establishes that, by 2030, not more than 65% of the EU’s annual consumption of each strategic raw material at any stage of the value chain is to be sourced from a single third country. This brief, which builds on Tænketanken EUROPA’s previous works, seeks to unpack the strategies deployed by the EU in pursuit of this diversification target. 

Why trade is not enough

There is an ongoing political discussion both within the Commission, but also among Member States, as to whether the EU can secure its critical mineral supply chains through mere import diversification or whether the EU also needs to build up industrial capacity in third countries. So far, the EU has been pursuing strategies along both these vectors, completing trade and investment agreements to increase its network of preferred trading partners and signing strategic partnerships to create investment opportunities overseas.

Industry forecaster, Benchmark Minerals, estimates that at least 384 new graphite, lithium, nickel, and cobalt mines will have to be opened by 2035 to meet global demand for electric vehicle battery materials alone. To secure true stability of supply, the EU thus cannot rely solely on increasing its number of trading partners but must be proactive in ensuring European engagement in supply chains on competitive terms.

Since mining and processing are capital intensive processes, accompanied by a slew of associated environmental and business risks, attracting investment in mineral projects poses a challenge the EU must overcome. The EU must think beyond its current strategies, which though feasible are not sufficiently innovative, to develop tools that will both incentivize and protect European stakeholder involvement.

Reducing dependencies through development: The EU’s Strategic Partnerships

The EU’s raw materials strategy has emphasized the creation of Strategic Partnerships on Raw Materials Value Chains, which are formalized in memoranda of understanding (MoUs) and pledge to facilitate investment in CRM value chains abroad. The EU has forged 13 such agreements with mineral-rich countries outside of the Union since 2017, with more agreements in the pipeline.

The partnerships aim to promote economic development in cooperating countries in mineral extraction, processing, and related infrastructure, scaling up global CRM output. Being non-legally binding, the MoUs are practical: they are easy to set up, quick to push through the internal machinery of the EU, and they satisfy a political appetite for official statements of cooperation. They are followed by more concrete, though still not legally binding, roadmaps identifying projects and laying out a step-by-step approach to achieving the goals of the partnership, which the EU and its partners agree to design within six months of the Strategic Partnership’s signing.

By opening up opportunities for EU investors to establish a foothold in third countries, the strategic partnerships constitute a means of establishing a European presence in global CRM supply chains. In the MoUs, the EU promises prioritized funding for projects through the EU Global Gateway, the EU’s foreign investment policy initiated in 2021. Global Gateway has earmarked a total of €300 billion to clean energy and infrastructure projects worldwide. Deploying Global Gateway funds and a Team Europe approach, under which the EU pools resources from the EU, Member States, and other actors such as development finance institutions and the European Investment Bank, the EU hopes to stimulate private sector investment in partnering countries. However, investors will need more concrete incentives than the Partnerships alone, not least because the Strategic Partnerships, as non-binding compacts, do not create the clear and enforceable legal guarantees necessary to support investments.

Reducing dependencies through trade policy: Understanding the EU’s exclusive competence FTAs

In addition to forming Strategic Partnerships, the EU has doubled down on efforts to bring pending trade agreements with resource-rich countries across the finish line, in a move to diversify its critical mineral supply by increasing trade privileges in CRM markets worldwide. While FTAs are broad arrangements that cover relations across a range of economic sectors, critical raw materials can be a driving force behind these agreements. All new EU trade agreements since 2015 have contained a dedicated chapter on Energy and Raw Materials.

Trade agreements have limited power to stimulate imports of critical raw materials into the EU because there is little scope for country-specific tariff reductions on CRMs. 92% of EU CRM imports do not pay import duties, whether because of tariffs set at zero or trade agreements already in force. The remaining CRM imports are covered by a tariff ranging from 2-7% for unprocessed and 3-9% for processed goods. As such, there is little scope for significant further reduction. However, the EU’s FTAs can be understood as reflecting a shift away from traditional trade liberalization methods and towards increasing opportunities for EU companies in sourcing SRMs overseas, much like the Strategic Partnerships, although FTAs are legally binding accords.

However, trade agreements might help restrict protectionist CRM policies implemented by mineral exporting countries. Such measures pose a worrying barrier to trade in critical minerals. In newly developed FTA provisions, the EU has included additional rules which aim to address defensive CRM trade strategies adopted by resource-rich countries and to close gaps in existing WTO regulations. Recent FTAs have also sought to open foreign markets to EU investors in the extractive industries of FTA partners, for example by securing preferential access for EU investors to trading opportunities and ensuring non-discriminatory procedures in the authorization of exploration and production licenses. 

Since 2017, the EU has crafted more agile FTAs—slimmed down agreements designed to fall under exclusive EU competence which can enter into force with only the consent of the EU Council and European Parliament. In this way, the EU has managed to accelerate the exhaustive ratification procedure associated with traditional trade agreements. However, the EU’s newest trade agreements, including the deals with mineral-rich Chile, New Zealand, and Vietnam, are unable to secure full protection and security for EU investors once they are operating in foreign markets: because investment protection counts as an area of shared competence, these FTAs must leave out provisions protecting EU investors against the expropriation of their investments.

Though offering a promising way of expediting FTA ratification, the inability of exclusive competence FTAs to secure investment protection makes these agreements weak supports for the Strategic Partnerships’ investment push. The EU’s current Strategic Partners are predominantly countries where no trade agreement with investor protection articles is in force, whether because negotiations have been on hold, as is the case in the DRC and Zambia, or because ratification is embattled, as is the case with the MERCOSUR country, Argentina.

Investment protection: The missing piece in the EU’s strategy

Neither exclusive EU competence FTAs nor Strategic Partnerships include robust, legal-binding, investment safeguarding measures, which, though controversial, can be crucial prerequisites for investor engagement. It is only with fully-fledged, shared competence trade and investment agreements that the EU has the ability to ensure legally binding investment protection mechanisms, including the shielding of EU investments against discriminatory judicial and administrative procedures and the safeguarding of investors against expropriation or nationalization of their investments. These rules have bite: Investor State Dispute Settlement (ISDS) provisions grant EU investors standing to sue the EU’s trading partners directly. Remedies include financial compensation or restitution of expropriated property. Due to investment risks in many of the EU’s partnering countries, investment protection provides the stability essential for the kind of investment in raw materials value chains that the EU hopes to foster. ISDS procedures, however, are increasingly coming under fire for enabling private companies to sue governments when climate policies or local opposition affects their profits. Should the EU’s trading partners grant EU investors the right to ISDS procedures, they would expose themselves to substantial risk of lawsuits and weaken their leverage to take further measures to protect the environment, as well as protected and indigenous land. As EU-level investor protection measures will not materialize soon, mechanisms for de-risking investment will have to be installed on a project level basis, including guarantees from the Multilateral Investment Guarantee Agency (MIGA) of the World Bank, from national export credit agencies, or the private political risk insurance market. 

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Achievement of sustainability goals is an epic task for developing economies that still strive to fulfil their basic needs. The availability of limited resources in the developing world vis-à-vis the ever-increasing demand poses further challenges to developing economies willing to transition into circular economies. Reverse logistics (RL) can facilitate this transition towards a circular economy (CE) by maximising resource utilisation and minimising waste, contributing to sustainability goals. This paper contributes to emerging literature by analysing the development and comprehensive potential of reverse logistics as a sustainability tool. It explores the significant barriers to the adoption of reverse logistics towards a circular economy, considering long-term sustainability. In the first phase, thirteen barriers have been identified from the past academic literature. Three barriers with a defuzzification number less than the threshold limit are excluded, and the final ten barriers are then prioritised using the decision-making trial and evaluation laboratory (DEMATEL) method. The findings suggest that a lack of strategic plans for returns is crucial for RL adoption towards a circular economy, followed by a lack of visibility for recycling/reuse. Organisations can increase customer satisfaction, promote environmental sustainability, and gain a competitive edge in the market by creating a strategic plan for reverse logistics. Organisations may lower costs and contribute to a more sustainable and ecologically responsible supply chain by improving visibility across the reverse logistics process. The results serve as a framework for decision-making in RL towards sustainable development. Managers and policymakers can formulate more robust and realistic decisions that align with “maximising profits,” “saving the planet,” “social concerns,” and, most importantly, “consumer concerns” in the circular economy ecosystem. Several implications are derived, leading to increased competitiveness and resilient business strategies. The novelty of this work lies in the identification of barriers to reverse logistics adoption towards a circular economy using an integrated fuzzy Delphi-DEMATEL approach, considering long-term sustainability. This approach is studied for the first time in a developing economy context, proposing social, economic, and environmental effects and actions to be taken by organisations for sustainable development.

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