How Tariffs on Canada and Mexico Could Impact Your Packaging Costs in 2025
How a 25% Tariff on Canada and Mexico Could Impact Your Packaging Costs
The U.S. government has introduced a 25% tariff on products imported from Canada and Mexico. If your business relies on packaging materials like pallets, boxes, cardboard, or IBC totes, this tariff might directly affect your costs. Here’s an overview of what’s changing and how it could impact your business operations.
What’s Changing?
For years, businesses have benefited from competitively priced packaging materials imported from Canada and Mexico. However, with the new 25% tariff, every shipment from these countries will now carry a significant additional cost.
This isn’t a minor tweak—the increase is substantial and could disrupt your cost structures. What's more, the packaging sector has experienced steady declines in material costs following the supply chain challenges of 2019–2021. These disruptions proved that any shake-up in the supply chain often has significant implications for the reusable packaging market.
Lumber’s Role in Packaging Costs
When it comes to industrial packaging—whether pallets, boxes, or IBC totes—lumber plays a key role. A significant amount of this raw material comes from Canada.
Canadian lumber is favored for its high quality, availability, and proximity to U.S. manufacturing plants, making it relatively inexpensive to transport across the border. This steady, trusted source of lumber has historically kept packaging costs manageable in the U.S. However, the new tariff adds complexity and cost to this long-standing trade relationship, which could result in price hikes for packaging essentials.
That being said the united states in also a large producer of lumber so this may bring a boost to US lumber production. Although the industry has been in a decline the last few years with many sawmills closing down across the country.
The Plastic Industry's Role in Packaging Costs
Just as lumber has long been a staple for producing pallets and other packaging essentials, plastics play a critical role in manufacturing items like IBC totes and other durable containers. The U.S. often sources high-quality plastics from Canada and Mexico because these materials offer consistency, strength, and a reliable supply. However, with the newly imposed 25% tariff, the cost of importing these plastics is expected to climb. This means that manufacturers who rely on plastic for packaging solutions may face steeper production costs. As these increased expenses filter through the supply chain, businesses could either see their margins squeezed or pass the higher costs on to customers. Consequently, companies might start exploring alternative sourcing strategies or investing in more efficient production methods to keep their packaging costs in check. Many in the plastic industry have spoken about these concerns
A Closer Look at the Impact on Packaging Materials
Pallets
Pallets are a backbone of the logistics industry, and many are made using imported materials, including Canadian lumber. With the tariff, production and import costs for pallets are expected to rise, leading to increased shipping and handling expenses for businesses.
Boxes and Cardboard
Boxes and cardboard packaging are everyday essentials for countless businesses. If the cost of raw materials like paperboard or recycled fibers spikes, manufacturers will likely pass those costs down the chain, leaving you with pricier packaging options.
IBC Totes
Intermediate bulk containers (IBCs) are vital for transporting liquids and bulk goods. These durable containers are made from plastics or metals that may also be affected by higher costs under the tariff. Industries dependent on IBC totes could see their packaging budgets stretch even further.
What Can Businesses Do?
While this policy shift introduces new challenges, there are steps you can take to mitigate the impact on your business.
1. Explore Local Sourcing
Consider sourcing raw materials and packaging products from domestic suppliers. Though these options may appear more expensive at first glance, they could help you avoid the additional tariff and prevent delays in your supply chain.
2. Optimize Production Processes
Look for ways to use materials more efficiently or switch to alternatives that aren’t affected by the tariffs. Small adjustments in the design or production process—such as using lighter materials or standardizing packaging sizes—can lead to substantial savings over time.
3. Communicate Proactively
If adjusting your pricing is unavoidable, be transparent with your customers and partners. Clear communication about rising costs and the reasons behind them can help maintain trust and sustain strong business relationships, even in difficult times.
Final Thoughts
The 25% tariff on imports from Canada and Mexico is a complex and significant change that will likely drive up prices for essential packaging materials such as pallets, boxes, cardboard, and IBC totes. While these new costs will present obstacles, they also encourage businesses to explore creative solutions, such as finding local suppliers, enhancing production efficiency, and working closely with supply chain partners.
It’s important to stay informed as the situation evolves. While the effects of the tariff may not take hold immediately, assessing your options now can help you adapt smoothly. Start thinking proactively about changes to your supply chain and cost strategies so your business is ready to face this new reality.