It’s no secret that tariffs, which are a tax on imported goods, may rise significantly during the Trump administration. Trump has vowed that increasing them would be among his first executive orders. They could range from 25% on all products entering the country from Canada and Mexico to tariffs that could reach as high as 60% on Chinese products, among other countries. Your business will likely feel its impact, especially if you rely on overseas packaging. If you’re not thinking about how to avoid those costs, you should be.
Trump’s comments should be taken at face value, as he has raised tariffs before. In 2018, Trump enacted a series of tariffs on steel (25%) and aluminum (10%) from most countries, plus 30% to 50% on all goods imported from China.
The Impact of Tariffs on Packaging
Tariffs raise prices on many products, including raw materials that originate overseas. This forces U.S. manufacturers to increase their prices to maintain their sales margins. “If we get tariffs, we will pass those tariff costs back to the consumer,” said Philip Daniele, CEO of AutoZone.
Many manufacturers are stocking up on basic goods to stay ahead of the projected tariffs. The Wall Street Journal reports, “manufacturers’ main concern is that if they wait, competitors will secure the items at lower cost, and the companies will be forced to raise prices before competitors do.” Unfortunately, this increased product demand may cause substantial supply chain delays across many industries—delays that are already frustrating and common. Amanda Russo, founder and CEO at Cornerstone Paradigm Consulting, as reported by Forbes, said that these tariffs “very likely will disrupt the flow of trade by adding complexity to customs processes and extending lead times that are already quite long.”
Manufacturers that rely on overseas suppliers for goods or packaging should be prepared with a contingency plan to mitigate the high costs and potential delays.
How U.S. Packaging Suppliers Can Avoid the Tariff Impact
One way that businesses “can proactively mitigate the impact of potentially higher tariffs is by re-evaluating their supply chains and considering strategic diversification of sourcing and production to areas where tariffs are not being imposed,” said Paul F. Magel, president of the application solutions division of Computer Generated Solutions, Mr. Magel stresses that, “It’s about moving from reactive to proactive. Companies that take this moment seriously—invest in resilience, embrace technology, and build partnerships—will not just weather the storm; they’ll come out stronger.”
Unlike overseas suppliers, many U.S. packaging suppliers, including manufacturers, have inventory available now or that can be produced immediately. As we reported in an earlier post, the best way to avoid the potential pitfalls of overseas shipping is to avoid it completely and instead rely on U.S.-based packaging sources. Onshore suppliers can deliver your product in days and not weeks. As a result, you also do not need to carry as much inventory, freeing capital and letting you adapt more nimbly to changes in demand.
The Carow Packaging Advantage
As a U.S.-based supplier and manufacturer, Carow Packaging makes packaging, including bottles and dropper caps, readily available with minimal lead time. Our dropper caps and pipettes are all manufactured in the United States, which protects them from tariffs and maddening shipping delays. You also avoid overseas transportation costs and can rest easy knowing transportation has been easier on the environment. This last point cannot be emphasized enough, as customers continue to strongly consider sustainability and environmental impact in their purchasing decisions, with specific packaging concerns regarding water pollution, ocean litter, climate change and natural resource depletion.
To learn more about our packaging solutions, including our Made in the U.S.A. solutions, give our Solutions Specialists a call at 815-455-4600.
