
Trade war puts circular economy back on the map
The trade policy President Trump is trying to push through with a heavy hand threatens to turn the world order completely upside down. Distrust between countries is growing and international trade is hanging by a thread. Can the circular economy escape this, creating opportunities for investors?
Globalisation at a turning point
Over the past four decades, globalisation has driven global economic growth and prosperity. It is difficult to quantify the benefits that free trade and international supply chains have brought us. In recent years, this trend has come under enormous pressure due to a succession of events, including the Brexit, the Covid pandemic, the US-China trade war, and the war in Ukraine. "It seems the integration of the world's largest nations has reached a turning point," says Jonas Theyssens, portfolio manager at KBC Asset Management.
Experts warn of the destructive consequences of regionalisation or even deglobalisation. Growing distrust between countries is pushing governments to protect their own economies.
Jonas Theyssens, portfolio manager KBC Asset Management

World leaders do not shy away from using precious resources and technology as geopolitical weapons. In 2022, President Biden decided to curb exports of Nvidia's most advanced chips to China, he said for security reasons. China hit back with restrictions on exports of essential raw materials such as gallium and antimony to the US and Europe. Around the same time, Russia blocked the transit of Ukrainian grain through the Black Sea, threatening to leave many African countries without it. "The fact that countries can decide overnight to turn off the tap completely poses a great risk to regions that are highly dependent on international trade, such as Europe," warns Theyssens.
Europe in a vulnerable position
The economic landslide poses another risk to Europe which, despite all efforts since the war in Ukraine, is still highly dependent on other countries for essential raw materials, technology and fossil fuels.
Our fragile position should be a wake-up call for European leaders to speed up the circular economy, which can strengthen our economic resilience in the short term.
Jonas Theyssens, portfolio manager KBC Asset Management
This fragile European position on essential commodities, rare metals, (fossil) fuels, computer chips and batteries is not new, but geopolitical tensions are re-exposing weaknesses. "For several things that are indispensable in our modern society, we depend almost entirely on other countries," Theyssens said. "For instance, we import 100% of all our heavy earth metals from China, 98% of our boron from Turkey and 71% of our platinum from South Africa. Those are staggeringly high percentages. We also remain too dependent on other countries for energy, despite the clear downward trend. According to the latest figures from statistics agency Eurostat, the European Union still imported 58% of its energy in 2023. Russia may no longer be the main supplier, but its reliance on Russian gas was swapped for oil and liquefied gas from the US and Qatar. Europe is also particularly dependent on other parts of the world for technology, mainly US companies. More than 80% of digital technologies - from hardware to software and everything in between - are imported, and most digital infrastructure is owned by non-European companies. With the dominance of China and the US in artificial intelligence and quantum computing, this percentage will only increase."
Time for action

European leaders face a huge challenge. Europe has reacted too late to the growing scarcity of raw materials, batteries, chips and fossil fuels. The vulnerabilities are known, but alternatives do not currently exist and sustainable solutions take time and money. "Klaske Kruk, expert on circular economy and sustainability, said during Circular Economy Week in the Netherlands that the call for autonomy is getting louder and louder and circular economy can contribute to that," Theyssens knows. "Putting more effort into becoming self-sufficient can ease the pain in the short term and strengthen our position at the negotiating table."
"With the raw materials that we mostly import and use, we are also handling them carelessly," he continued. "We recycle little and burn a lot. The least we can do is use the resources at our disposal much smarter. More attention should be paid to reusing, repairing, sharing and recycling at the end of life. Closing the economic circle will by no means be enough to completely eliminate the dependency problem, but it offers a real solution for now."
High time for governments to turn high ambitions into concrete actions. Companies simply cannot operate circularly in a linear system.
Jonas Theyssens, portfolio manager KBC Asset Management
"However, despite these promising developments, the introduction of circular economy has not yet lived up to expectations," Theyssens nuances. "The transition remains slow and uneven, with large gaps between theoretical potential and practical implementation. A sense of urgency is still lacking from governments, resulting in an insufficient legislative framework. Because raw materials could be easily and cheaply imported from other countries, the circular economy was a nice-to-have rather than a priority. There is also reluctance in the business world to move away from the traditional linear economy, as there is still too much uncertainty around regulations, payback on investments, and logistical challenges."
A structurally growing investment trend
Moving towards a circular economy offers investment opportunities in many sectors. From using more sustainable materials and packaging to introducing a circular design mentality into the production process. From extending the life of products through rental, repair and resale to managing and converting waste into resources. At every stage of a product's life cycle, there are opportunities for companies to integrate the principles of the circular economy to improve efficiency, reduce waste and capture new markets.
Investors at the forefront of circular economy as an emerging structural trend can reap the benefits over time.
Jonas Theyssens, portfolio manager KBC Asset Management
.jpg/_jcr_content/renditions/cq5dam.web.960.9999.jpeg.cdn.res/last-modified/1745486102480/cq5dam.web.960.9999.jpeg)
"As a real investment trend, the circular economy has not really broken through yet. The theme is often less tangible and does not capture the imagination the way artificial intelligence, 'space economy' (commercial use of space, n.v.d.r.) or self-driving cars do. Yet the theme is so broad that as an investor, with a potential interest in circular economy, you can respond in a staggered way to a structural and very current growth trend," Theyssens concludes.
"Take a logistics company like Brambles. Brambles has a pool of 350 million reusable pallets, crates and containers that it rents out to companies to transport their goods and transfer them from customer to customer after use. Or a company like Copart, the largest online car auction platform, which increased its market capitalisation more than tenfold since 2015. Copart sells cars, which can no longer be insured due to damage, to repairers or dismantlers so that the parts get a second life. Within waste management companies, we see Waste Management or Republic Services turning waste into power.
But we also have several companies in our own ranks that are heavily committed to the circular economy. A company like Denmark's Novonesis is a world leader in enzymes and micro-organisms, needed for the production of biofuels, probiotics and plant proteins, among others. A Befesa or a Norsk Hydro are active in steel and aluminium recycling. And a Solvay, which just recently opened a completely new rare earths production hall in La Rochelle, France," Theyssens concludes. "So plenty of examples."
Read more about responsible investing?
This article is purely informative and should not be considered investment advice.