Chinese trade barriers are compounding the problems faced by companies that recycle scrap paper, plastic and metal.

The U.S. generates more recyclable waste than any other country. China is the top customer for that scrap. China bought two-thirds of the used paper and half the scrap aluminum that the U.S. sold overseas last year, according to the Institute of Scrap Recycling Industries Inc., part of an overall haul of 13 million metric tons of cast-off American packaging, periodicals and shredded car bodies.

China’s 25% tariff on U.S. scrap aluminum would make reusable metal from other countries more appealing. China also recently imposed tougher quality standards on other imported recyclables, sending the U.S. recycling industry into a tailspin.

Prices for discarded newspaper, office paper and magazines have fallen to zero in the U.S. Inventories of paper, crushed milk jugs and old cardboard are swelling. No other country wants to buy as much U.S. junk as China had during the past several years.

“It’s really been a jolt to the entire industry,” said Joel Litman, co-owner of Texas Recycling Inc. in Dallas, which recycles paper and cardboard. “If China doesn’t take it, you can ship it to other places, but nobody has the capacity that China has.”

Cast-off paper, cardboard and plastic is sorted into bales in the U.S. that typically contain bits of food waste, glass and other contaminants. In China, those bales are unbundled and often further sorted by hand to remove unwanted items and segregate recyclable materials. Analysts say the contamination rate of up to 10% of a bale’s contents became a disposal headache for the Chinese and a health hazard to the workers that sift through them.

China imposed a 0.5% waste limit on imported recyclables from any country at the beginning of the year. That is roughly 9 pounds of waste in an 1,850-pound bale of paper. As exporters reacted to China’s new quality standards, U.S. exports of scrap plastic to China dropped from October to January by 80% to 5,000 metric tons.

William Winchester, chief operating officer for Berg Mill Supply Co., a scrap broker in Los Angeles, said most U.S. sorting centers handling paper and plastic collected by home recycling services aren’t capable of reducing food waste and other contaminants by enough to comply with China’s new levels.

“It’s basically an impossible standard,” he said. “There are very few sorting facilities that are even going to try it. You’re losing money sorting it out.”

Trash haulers have expanded the list of materials they will recycle over the years to reduce the fees they pay landfills to take trash. Now that higher volume of recyclable material is becoming a burden. Some trash collectors may choose to throw away recyclables if they can’t find other buyers.

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