Using recycled content in new products reduces the need for primary materials, often leading to lower environmental impacts. EU regulators proposed introducing mandatory recycled content targets, e.g., for packaging plastics or large lithium-ion batteries. Companies have formulated voluntary recycled content targets in parallel with these regulatory proposals, for instance, carmakers. Although minimum recycling rates are mandatory for end-of-life vehicles in the EU, sufficient quality and availability of recycled content to produce new cars are uncertain due to challenges with closed-loop recycling and the unknown whereabouts of end-of-life vehicles. In the case of materials with limited availability of recycled content in the system, the automotive sector’s increasing use of recycled content may lead to less recycled content for other sectors, which may need to switch to primary materials. One industry may increase the circularity and reduce the environmental impacts of its products – while the circularity and environmental impacts in the whole system remain unchanged. Our work consists of two parts. First, we analyze recycled content targets as a public policy instrument. We combine a systematic literature review with policy analysis and expert interviews. Second, we elucidate the systemic implications of recycled content targets. In a case study of the automotive sector, we conduct material flow analyses and life cycle assessments under multiple scenarios – backed with expert interviews. We seek recommendations and best practices on how recycled content targets in individual sectors can be complemented and improved to achieve system-wide benefits.