A direct hit from a tariff policy on packing material cost
Trump governments impose tariffs for aluminum, wood and other packaging upstream raw materials, direct push the high cost of packaging industry, material substitution effect and the supply chain reconstruction.
?
- Aluminum Tariff and material substitution: After the 25% tariff on imported aluminum was announced in February 2025, Coca-Cola and other companies, faced with a surge in the cost of aluminum cans, plan to increase the use of PET plastic packaging, which may lead to an increase of about 50,000 tons of plastic use per year.
- Pulp supply chain disturbance: Tariffs on Canadian wood products were imposed in March of the same year, affecting the supply of "Northern bleached cork cowhide pulp" (accounting for 30% of the standard toilet paper material in the United States) required for the production of toilet paper in the United States. In 2024, the United States imports 2 million tons of pulp from Canada, which is difficult to replace in the short term.
- Cost transmission effects: Every 10% increase in the cost of aluminum cans leads to a shift of 3% to 5% of products to plastic packaging; The increase in pulp costs may lead to a rise in the price of toilet paper and panic buying.
?
Environmental goals clash with cost pressures - recycling rates for aluminium cans (around 70 per cent) are significantly higher than for plastic (around 30 per cent for PET bottles) and shifting to plastic packaging could undermine corporate carbon reduction commitments.
?
Paper packaging structural opportunities
The impact of tariffs on aluminum, plastic and other materials, as well as the regional adjustment of the pulp supply chain, creates alternative space for paper packaging and power for technological upgrading.
?
Alternative scene expansion
- Beverage packaging: The rising cost of aluminum may push some companies to switch to coated cardboard (such as sterile carton), especially in fruit juice, dairy products and other categories with higher requirements for fresh-keeping.
- E-commerce and logistics packaging: Under the pressure of plastic buffer material cost, the demand for environmentally friendly paper packaging such as corrugated boxes and pulp molding may grow. In 2024, the penetration rate of paper packaging in US e-commerce express has reached 68%, and the growth rate is expected to increase by 2-3 percentage points after tariffs.
?
Regional supply chain reconstruction
The US relies on Canada for about 40 per cent of its pulp imports, and the tariffs could accelerate companies' search for alternative supply sources (such as Northern Europe or South America) or invest in local pulp capacity, favouring paper packaging autonomy in the long run.
?
Pain in the short term and long-term opportunities - the balance of the pulp price fluctuations may exacerbate paper packaging cost uncertainty, but technical advances such as lightweight cardboard, waterproof coating can be more competitive.
?
Enterprise strategy and industry trends
Packaging enterprises hedge tariff risks through supply chain diversification, material innovation, product structure adjustment and other ways, while seizing paper packaging opportunities.
?
Supply chain optimization
- Material substitution: Coca-Cola and other enterprises explore "aluminum-paper hybrid packaging" (such as aluminum foil composite cardboard) to balance cost and environmental protection.
- Local procurement: Increased investment in local pulp capacity in the United States. The investment of related projects in 2025 Q1 increased by 15% year-on-year, mainly focusing on high value-added special pulp.
?
Technology upgrade
- Research and development of functional cardboard: Develop high-end cardboard with waterproof, thermal insulation and compression resistance (such as vacuum insulated cardboard), expand the pharmaceutical cold chain, fresh transportation and other scenarios, and the gross profit margin is 15-20% higher than that of traditional cartons.
- Circular economy practice: To promote the construction of paper packaging recycling system, some states in the United States have legislates requiring e-commerce platforms to use at least 80% recyclable paper packaging.
?
Policy uncertainty risk -- Trump's tariff policy focuses on the "return of manufacturing", and may impose additional tariffs on imported paper packaging products in the future, so we need to be vigilant about the escalation of trade barriers.
?
Summary
Cost shocks drive material substitution: Trump's tariffs push up the cost of materials such as aluminum and plastics, and the substitution opportunities of paper packaging in scenes such as beverages and e-commerce appear.
?
Short-term pressure on pulp supply chain, long-term optimization: Canadian pulp tariffs cause short-term supply constraints, but accelerate global supply chain restructuring and local capacity investment.
?
Technological upgrading is the core competitiveness: Breakthroughs in waterproof, thermal insulation and lightweight paperboard technology can improve the penetration rate of paper packaging in high value-added fields.
?
Enterprises need a dual-track strategy: In the short term, they should offset costs through material substitution and supply chain diversification; in the long term, they should lay out the research and development of paper packaging technology and the recycling system.
?
Policy risks still need to be vigilant: Tariff policies may be extended to finished product packaging, and we need to pay attention to the potential restrictions of the US "manufacturing return" policy on imported paper packaging.
Guangdong Shiteng Wisdom Technology Co., Ltd.