What do tariffs mean for US custom packaging costs?
26 February 2025
With tariffs on countries around the world coming, many businesses are starting to ask what does this mean for US companies and manufacturing costs?
We can’t comment for the entire US manufacturing sector, but we can share our expectations for custom packaging fabrication.
We have seen a noticeable uplift in the demand for industrial packaging at Larson Packaging Company over the last 6-12 months. This has been led by the boom in AI computing technology and related IT and electronics components. We believe this bodes well for the entire US economy.
It is anticipated that some of our inventory inputs may increase in the coming months. Raw materials that could be affected include lumber (due to Canadian tariffs), plywood (due to reciprocal tariffs), and hardware such as steel and fasteners.
We source mostly US lumber and plywood, but we may still see a temporary increase in prices as local suppliers work to increase supply to meet US demand. However, this is not a certainty as the housing sector is currently slow due to interest rates and this may help to offset total demand. We do expect an increase in steel and metal fasteners, but they are not a large component in the cost of packaging, except in rack crates and rack pallets.
Overall, we believe packaging cost inputs will increase some, but the effect for our customers will be manageable for three important reasons.
- We don’t mark up our materials. We make our money on packaging fabrication not the sale of raw materials. This means we are not forced to add an extra mark up on the materials used within the job.
- We manufacture in the USA. Since we manufacture in the US, we don’t have any cross border, import/export, or tariff issues on finished goods to our customers.
- Foreign currencies devaluing against the US dollar. Economists are predicting that the foreign currencies of affected exporting countries to the US may devalue against the strong US dollar. This will make imported products cheaper to buy, helping to offset the tariffs.
We are closely monitoring the situation on all our raw material inputs.
Order now before the tariffs commence
Another strategy worth considering is to move any known packaging orders forward before the tariffs. This will enable you to buy an inventory of packaging before the tariffs, giving your organization more time to adjust to future changes.