Business owners of all shapes and sizes know this: Slight changes in the marketplace can create a rippling effect. Major changes can come from just the smallest tweak in pricing, availability, or consumer attitude. That, perhaps more than any other reason, is why business owners are watching the tariff situation closely. Just a small price increase in one chain of the logistics link can cause problems down the line as far as inflation, demand, and supply.
It’s important to know that tariffs have been in place for ages. They are a part of our economic structure on a worldwide basis and help to regulate supply and demand as products flow between countries. Tariffs are accurately described as taxes imposed on imported goods and are often used to protect domestic industries or as part of larger trade negotiations.
But how do tariffs affect the packaging industry? Just because the price increases on a product won’t affect the packaging, or will it? And could American-made production and packaging be part of the solution?
When tariffs are applied to products, especially those imported from countries like China, Southeast Asia, and Europe, it often leads to an increase in the cost of those goods. Packaging prices can be affected, too. It’s the ripple effect. Here’s how:
Raw Material Costs
Shipping and Logistics: Increased tariffs on fuel or transportation equipment could drive up logistics costs. If costs go up, it’s possible that shipping companies can be affected. Shipping times may also be delayed, potentially causing supply shortages.
Supply Chain Adjustments: Businesses that rely on imported goods may need to re-evaluate their supply chains. Shifting to domestic suppliers is an option, even if at a higher cost. In this case, domestic manufacturers will be forced to step up. Another ripple to watch closely, for sure.
All of these factors can increase the cost of goods, and that includes packaging. If tariffs are involved, it’s likely that everything will go up.
Shifting to domestic packaging and product manufacturing should be considered, now before the impact of the tariffs is felt. That way, either way, you’ll be ready.
By sourcing packaging domestically, companies can avoid import tariffs altogether. This could stabilize prices, offer a more reliable supply chain, and shorten lead times.
Perhaps the best way to keep costs down in the face of tariffs is to produce the product in America. Certainly, that is the intended income. Domestic production offers several advantages in protecting against the financial strain tariffs can impose:
Tariff-Free Production: This can lead to more stable pricing, as companies don’t have to worry about fluctuating import taxes on raw materials or finished products.
Faster, More Reliable Supply Chains: Domestic manufacturers often offer shorter shipping times, which can lead to faster turnaround and reduce the risks of supply chain delays. Understanding the importance of having a reliable partner in your supply chain is critical to your success.
Supporting Local Economies: Sourcing from American manufacturers helps bolster a stronger local economy. This can provide additional goodwill for companies that prioritize American-made products, appealing to customers who value supporting local businesses.
Still, there may be cost increases if you are switching from overseas to domestic. We think that the increase would likely pay dividends in these ways, as opposed to just paying for tariffs.
Looking at history can give us a roadmap of what might happen in the packaging and logistics industry. One of the most notable examples of tariff increases occurred during the 1930s with the Smoot-Hawley Tariff Act, which raised U.S. tariffs on thousands of imported goods. While the intent was to protect American industries, the result was a global trade war that reduced international trade, increased costs, and prolonged the Great Depression. Packaging industries were affected as well, with shortages of materials and increased costs leading to inefficiencies across the supply chain.
More recently, the U.S.-China trade war from 2018 to 2020 saw significant tariffs placed on a wide range of goods. Packaging materials such as plastic resins, aluminum, and paper were all hit by these tariffs. The result? Packaging costs increased for many companies that relied on Chinese imports. Some businesses adapted by shifting their supply chains to other countries or by seeking domestic alternatives.
The future impact of increased tariffs is not set in stone. Tariffs may lead to higher costs and reduced availability of packaging materials, as history has shown. However, businesses today are more agile and globally connected, giving them more options to pivot than in past decades. Companies are already diversifying supply chains, exploring automation, and turning to sustainable materials that may help offset tariff-driven price increases.
While history suggests tariffs could lead to increased costs, especially in the short term, companies that stay flexible and explore alternative strategies like American-made packaging will be better positioned to weather potential economic shifts.
At Ashtonne Packaging, we are watching closely. We always are. Because while today we are talking about tariffs, there is always some small ripple happening somewhere that can affect the way you handle your packaging and logistics needs. We’ll take advantage of those opportunities to serve your business with the highest quality, most affordable packaging, on-time logistics, and trustworthy shipping, no matter what changes take place.
That's not just a business strategy, it’s the right thing to do.
If you have questions about packaging, logistics, and how to strategize effectively to lead your company through change, reach out to us. Strategizing for growth and efficiency is what we do best.
Give us a call or contact us and let’s see what ripples we can find. We’ll help you to adapt and to succeed.
At Ashtonne, we know you have competitors. And we know your bottom line matters to keep consumer prices as low as possible. We also know that maintaining a reliable supply chain is critical to customer satisfaction and brand loyalty. It makes sense to have a plan and a packaging partner that accounts for both.
Whether you are a small business, a large business, or a new business, just starting up and looking to do things right and grow, Ashtonne Packaging can be that partner. Reach out today and let's talk about tomorrow. Call Ashtonne Packaging at 877-832-7720 or contact us here.