How Tariffs on China, Canada, and Mexico Will Impact Packaging Costs for CPG Manufacturers and Brand Owners

In today’s global trade environment, tariffs are reshaping the cost structures for Consumer Packaged Goods (CPG) manufacturers and brand owners. With recent tariff adjustments on imports from China, as well as potential tariffs on imports from Canada and Mexico, businesses are experiencing rising costs, particularly in packaging materials. These cost increases will impact margins, supply chain strategies, and pricing models, requiring manufacturers to reevaluate their operations to maintain competitiveness.

How Tariffs Affect Packaging Costs for CPG Manufacturers

For CPG manufacturers and brand owners, packaging is a critical element in product presentation, preservation, and compliance. With many packaging materials sourced internationally, tariffs on key suppliers have direct implications for production costs.

Paper and Cardboard Packaging – Many packaging manufacturers rely on Canadian imports for paperboard, used in packaging snack bars, cookies, and chocolates. Tariffs on these imports raise costs, forcing companies to either absorb the added expense or adjust their pricing strategies.
Plastic Packaging – China is a significant supplier of plastic-based packaging, including wrappers, pouches, and containers. Higher tariffs on these materials mean manufacturers must either source from alternative suppliers or deal with elevated procurement costs.
Aluminum and Metal Packaging – Packaging materials such as aluminum foil and metal tins, often sourced from Mexico, are essential for preserving baked goods and confections. Increased tariffs will raise the cost of these inputs, impacting overall profitability.
Ink and Labeling Materials – Labels, adhesives, and printing inks, often sourced from tariff-affected regions, are becoming more expensive. This directly impacts branding and regulatory compliance costs for manufacturers.

Implications for CPG Businesses

The rising costs of packaging due to tariffs present several strategic challenges for manufacturers and brand owners:

Margin Compression – Higher input costs put pressure on profit margins, requiring businesses to find cost-saving efficiencies elsewhere.
Pricing Adjustments – Manufacturers may need to pass increased costs onto retailers or customers, impacting pricing structures and competitiveness.
Supply Chain Diversification – Many companies are exploring alternative suppliers or domestic sourcing options, which may involve additional operational complexities.
Material Innovation – Some brands are shifting toward alternative packaging solutions to mitigate cost increases while maintaining quality and compliance.

Operational Adjustments for Manufacturers

In response to these cost pressures, manufacturers and brand owners should consider the following strategic actions:

Renegotiating Supplier Agreements – Establishing long-term contracts with suppliers to lock in pricing and avoid sudden increases.
Investing in Automation – Optimizing production efficiency to offset higher material costs through automation and improved production techniques.
Exploring Alternative Materials – Evaluating biodegradable, recyclable, or cost-effective packaging materials to maintain margins.
Assessing Tariff Exemptions – Understanding potential tariff exemptions or trade agreements that might alleviate cost burdens.

Looking Ahead

As trade policies continue to evolve, CPG manufacturers and brand owners must remain agile. Strategic sourcing, cost management, and innovation in packaging will be key to mitigating the impact of tariffs. By proactively addressing these challenges, companies can maintain their market position while navigating the shifting global trade landscape.