NEW TARIFFS, OLD WOES: ARE U.S. LUMBER MARKETS BRACING FOR A ROUGH CUT?
This content is being republished with the consent of Fisher International and ResourceWise. Read more about Paper Industry at ResourceWise. Nov 21, ‘24
The results of the November 2024 U.S. elections are in, and with a new government at the helm, industries worldwide are bracing for impact. For the global pulp and paper sector, particularly exporters to the U.S., the proposed tariffs and immigration policies are a potential double-edged sword. Will they spur growth or shred profitability?
TARIFFS THREATEN TO INK NEW COSTS
Among the most debated policies is the universal 10% import tariff proposed by the incoming administration. For the pulp and paper industry, where international trade forms a crucial backbone, this move could significantly disrupt supply chains. Major exporters like Canada, Brazil, and Europe are likely to bear the brunt, potentially making U.S. imports pricier than ever.
This tariff comes on top of existing duties on specific paper grades, such as those targeting Canadian uncoated groundwood paper, which already squeezed margins for printers and publishers. An additional cost burden could discourage U.S. buyers, causing a ripple effect across the global market.
IMMIGRATION POLICIES: LABOR SUPPLY AT RISK
The U.S. pulp and paper sector relies on a stable and skilled workforce, including a significant number of immigrant workers. Proposed mass deportations of undocumented individuals threaten to shrink this labor pool, potentially increasing costs in areas like recycling facilities, packaging plants, and logistics operations.
ENVIRONMENTAL COMPLIANCE VS. TRADE BARRIERS
The industry has also invested heavily in sustainable practices, aligning with global (Environmental, Social, and Governance) ESG goals. However, new trade barriers could disrupt the import of sustainable raw materials, such as certified pulp from abroad, forcing domestic players to either absorb higher costs or turn to less sustainable sources.
PACKAGING: A BRIGHT SPOT UNDER THREAT?
With the e-commerce boom driving demand for packaging paper and board, this segment has been a silver lining for the industry. However, supply chain disruptions caused by heightened tariffs, particularly on raw materials like kraft linerboard, could derail growth in this critical segment.
A FRAGILE FUTURE
While the U.S. administration’s policies aim to strengthen domestic industries, the pulp and paper sector risks being caught in the crossfire. Higher costs, disrupted supply chains, and reduced labor availability could dampen prospects in a market that thrives on efficiency and global collaboration.
The question remains: Can the paper industry adapt and innovate under these challenging conditions, or will it find itself crumpled under the weight of policy shifts?
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