Circular Economy Enablers
Against a backdrop of deglobalising supply chains and soaring costs, one sector stands resilient, where companies are neither exposed to demand side or supply side disruptions. These are Circular Economy Enablers.
With Biden maintaining Trump-era tariffs on China, the bipartisan “deglobalisation” strategy fosters reshoring and benefits Circular Enablers, particularly those in equipment and machinery rental for construction. Equipment rental companies Ashtead Group and United Rentals, are not only insulated from raw material cost increases but they’re also not involved in end-product sales. As a potential consequence of rising costs, the sharing economy, exemplified by companies like Herc Holdings (formerly Hertz), may also flourish, with usership models gaining traction over ownership. In response to localised supply chains, businesses are anticipated to heavily invest in smart, roboticised industrial manufacturing, driven by resource efficiency amid scarcity and higher costs. This trend is expected to boost demand for licensing agreements with technologically advanced manufacturing leaders, such as Lenzing and ANSYS.1
Environmental Impact
The Biden administration has implemented rules to limit China’s influence in the U.S. electric vehicle (“EV”) supply chain. It’s a move that aims to secure the U.S. EV future, addressing concerns about China’s dominance in key technologies and resources like lithium, cobalt, and graphite.
Starting next month, U.S. manufactured EVs with Chinese-made battery components will no longer qualify for full subsidies under President Biden’s $USD 369 billion Inflation Reduction Act. Additionally, EVs from companies with significant Chinese government ties or licensing agreements with Beijing-controlled operators won’t receive incentives.
Despite criticisms and tensions between the two nations, the Biden administration aims to balance environmental goals with economic competition, setting a 2030 target for EVs to represent 50% of new vehicle sales. The rules may impact tax credits, grants, and critical mineral sourcing, posing logistical and financial challenges to building a supply chain that is not reliant on China.2