2025 Predictions: Can circular manufacturing, deglobalization of supply chain drive sustainable innovation?

Every year around this time I like to have 30 minutes of quiet time and reflection before bed. What will happen this year in climate tech? Who are the key newcomers in our industries? What initiatives will fall short, and which ones will surprise us and remain hardened through geopolitical uncertainty and instability? I don’t think it’s going to take a crystal ball to make predictions in our space. Change is coming, and there’s already early hints for what to expect.

Predicting the state of circularity and sustainable business in 2025 involves looking at ongoing trends, technological advances, changes in consumer behavior and most of all, our new political climate. For my three predictions, I believe each one gives way to the other, but I invite all of my readers to keep me honest and share what else you see that’s on the horizon that are worth mentioning.

1. Federal Deregulation’s Paradoxical Effect on Sustainability

Let’s all take a deep breath and accept what’s coming our way on January 20. Federal deregulation on climate and environmental policies will happen under the new administration, and it’s safe to assume green innovation and sustainability initiatives will take a hit with threats of weakening policy, research and grant funding. But here’s my first prediction: this will paradoxically spur innovation and local action, as seen during previous periods of reduced federal oversight. (source)

For starters, new regulations to foster resource efficiency, recycling, and reuse must happen to meet the demands of the new administration’s “America first” manufacturing agenda. This was a massive part of the Trump administration’s message, emphasizing the revitalization of American manufacturing, reducing dependency on foreign imports, and creating jobs for U.S. workers. If the overarching goal is to make the U.S. economy more self-sufficient and globally competitive, then the optimist – and the realist in me – sees a circular economic model as the only path forward.? Turning waste into resources presents economic opportunities for American people and a revitalization plan that are, to my knowledge, completely unparalleled. Will the new administration see it this way too?

Today, stringent regulations often classify valuable materials—such as metals, plastics, and certain chemical by-products—as waste if they are not handled according to regulatory protocols. The result shouldn’t surprise you: this classification makes it difficult for end market recycling, take-back and reuse models to emerge, and the landfill becomes the most convenient option - only 7.2% of materials are cycled back into the global economy after their useful life. By allowing these materials to bypass stringent regulation when they are transported to recyclers or taken back for repurposing/remanufacturing purposes, we can clear a significant barrier that currently puts the efficiency of our recycling systems into question.

Furthermore, despite potential federal deregulation on climate policy, what we often see anyway is state and local governments taking the lead on sustainability initiatives, particularly in urban centers. Federal deregulation may shift focus away from climate action, but private investment and state-level incentives will support industries like recycling, repair, and renewable energy. I anticipate states like California, New York, and Washington to pass stricter laws on packaging waste, single-use plastics, and emissions standards, mimicking trends seen during previous administrations. These laws will incentivize businesses to align with circular principles. For example, as of March 2024, 11 U.S. states and two territories have passed statewide legislation to ban polystyrene foam, aiming to decrease plastic pollution.??

2. Circular Economy (and Circular Supply Chains) will Drive Job Creation

It should come as no surprise that the U.S. currently relies heavily on foreign sources for a wide array of products and especially rare earth metals, and if America becomes the land of the tariffs and trade wars, a wide range of materials, especially those used in high-tech industries such as electronics, renewable energy, defense, and electric vehicles are now worth their weight in gold as much as their weight in carbon. Manufacturing experts believe the U.S. should produce at least 50 percent of what it consumes, for most products. Increasing the rate of reuse and recycling of things like rare earth metals from old electronics, magnets, and other carbon-intensive products rather than investing in brand new production and processing facilities sure seems like a pro-DOGE position - one that's openly targeting inefficient federal procurement programs. It’s never the case where business entrepreneurs usurp government bureaucrats to lead a Department of Government Efficiency. This situation is only exacerbated by the administration doubling down on its plans for tariffs.

In the spirit of the holiday season, let's just look closely at one industry that’s feeling the pressure right now: toy manufacturers. If you’re a toy manufacturer and want to continue relying on cheap overseas manufacturing operations, the simplest solution is to continue with business as usual – pass along the cost of your 60% tariffed product directly to the U.S. consumer. Voila! - your $30 Tonka Mighty Dump Truck is now a $45 Tonka Mighty Dump Truck. However the new administration is all about business revitalization and cutting costs for the American people, so how exactly is that going to work?

Prediction: As businesses push to relocate their supply chains accordingly, we’ll see a boost in job creation from the circular economy. Emphasis on resource recovery, refurbishment, and localized production will create job opportunities across sectors. (source)

Using the previous example of the toy manufacturer, we’ll see innovations emerge around cost-cutting measures aimed at improving circular supply chains: products will be manufactured that are easier to repair, resell on a secondary market, and designed for reverse logistics - that is, they are ready to be sent back to reuse-minded service providers or manufacturers, reducing the reliance (and cost) of using virgin raw materials in production and in the process offsetting the cost of tariffs.

And we will see this play out in other industries, too. One example: The United States is a world leader in semiconductor design and R&D, but chip manufacturing occurs mostly in Asia. Only 12 percent of the world’s semiconductor chips are made in the United States, down from 37 percent in 1990. Diversifying supply chains and prioritizing local sourcing where feasible will reduce dependency and align operations with the new administration's protectionist incentives.

3. R&D and Technology-Driven Advancements for Circular Innovation

Here’s where all of this gets interesting. The new administration plans $1 trillion in infrastructure spending, prioritizing public-private partnerships and greater private-sector involvement. Manufacturers have an opportunity to quickly align with the infrastructure boom on the horizon. Imagine locating your facilities near upgraded transportation hubs or tapping into regions benefiting from major federal investments—this could slash logistical costs and open up new markets. To stay ahead of the curve, manufacturers must embrace diversification, leverage emerging technologies, and position themselves strategically to navigate these policy shifts. That means supply chain resilience, cost-efficient production through IT and automation, and recurring revenue through a mix of products and value-added services. It also means technology will continue to act as a catalyst, enabling transparency and efficiency in circular processes. Blockchain, AI, and IoT will make it easier to track resources, optimize supply chains, and enhance consumer engagement with reuse and recycling programs.

Prediction: 2025 will see the R&D and technology-driven advancements to spur circular innovation.

In his response to LinkedIn’s 25 Big Ideas that will change our world in 2025, Bill Gates had this to say: “People often think that fighting climate change is something that happens behind the scenes — via an algorithm optimizing energy use or a buried carbon capture system. But over the next year, some of the most powerful solutions will be working in plain sight.”

And the innovations that will be prioritized won't necessarily be for sustainability reasons. Instead it will be because they save time, cut costs and perform better than their wasteful predecessors.

One example of this we’re seeing today is carbon-sequestering building materials – bio-based materials like hempcrete, mycelium (fungus-based), and algae-infused building products continue to gain traction and reduce emissions in production but can absorb and lock away carbon over their lifespan while lowering the cost of disposition. This emerging trend towards regenerative building is helping to close the loop in carbon impact—making buildings not only sustainable but carbon-positive.

Speaking of positive – perhaps I’m being too positive, or perhaps what we’re hearing is all smoke and mirrors with new trade negotiations on the horizon and with history telling us a presidential transition often delays major, sweeping changes from happening right away.

In any case, keep me honest in the comments below. And to all my LinkedIn followers and readers, thank you dearly for your input, ideas and championing the work of Rheaply in 2024. Happy 2025!