The packaging industry doesn’t make a lot of the products you buy. It makes a lot of the products you buy deliverable.
And that takes materials – lots of materials: paperboard, plastic, steel and aluminum, to name a few.
So it’s not surprising that stakeholders are more than a little nervous about President Donald Trump’s newly imposed tariffs, which stand to boost the prices not only of finished products but of materials used to manufacture packaging for everything from soft drinks to chemical containers.
“The recent tariffs have led to industry-wide price increases, directly affecting global suppliers that serve U.S. customers,” packaging supply company Evergreen wrote in a blog post on Thursday. “Domestic suppliers, who often rely on imported raw materials like aluminum and steel, are also affected. For instance, new tariffs are projected to add $22.4 billion to the cost of steel and aluminum imports, impacting various industries, including packaging.”
Even if the full impact of the new tariffs is not yet clear, packaging manufacturers don’t have to look far into the past to find a basis for concern.
The trade war between the U.S. and China in 2018-2019, when the first Trump administration imposed tariffs on steel and aluminum imports, “reshaped cost structures, supply chains, and long-term strategies,” Mohamed Dabo writes in an article for online news outlet Packaging Gateway.
As with the current tariff regimen, the previous levies were intended to bring more manufacturing back to U.S. soil – a goal that according to Dabo went largely unmet, at least in the packaging industry. That was partly because despite surging aluminum and steel prices resulting from the tariffs, there was too little production capacity domestically to meet demand.
“US production of aluminium, for instance, couldn’t keep up with the growing need for packaging products, particularly in the beverage sector,” Dabo writes. “As a result, packaging firms continued to rely on imports, but at significantly higher prices due to the tariffs.”
And packaging companies in the United States did not significantly reduce their reliance on nations including Italy and Germany that have long been leaders in specialized packaging machinery.
U.S. exports were affected as well. China’s retaliatory tariffs hit American agricultural goods and, thus, the need for packaging for agricultural exports. “The knock-on effect was felt throughout the entire packaging value chain,” Dabo writes.
Frequently, packaging firms could not pass on to consumers the rising costs related to the trade war, cutting into profits.
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