President Donald Trump has forged ahead with tariffs targeting the United States’ neighboring trade partners. Starting Tuesday, imports from Canada and Mexico are subject to a 25% tariff.
Canada is responding by enacting retaliatory tariffs of 25% against $155 billion worth of U.S. goods, $30 billion of which take effect immediately. The remainder will be subject to tariffs in three weeks. That total would include pulp, paper, steel and aluminum products, per details shared in February. Mexico President Claudia Sheinbaum said Mexico’s own countermeasures will be announced Sunday.
Representatives from the paper and metal packaging industries in North America are alarmed by how these tariffs could disrupt important infrastructure and flow of materials — particularly between Canada and the U.S.
“While we recognize the Administration’s goals of securing our borders, AF&PA remains concerned that today’s new North American tariffs have potential to seriously disrupt our industry’s complex, cross-border supply chains,” said American Forest & Paper Association President and CEO Heidi Brock in a statement Tuesday. “These manufacturing processes have been built and refined with the customer in mind around existing mill infrastructure for decades.”
Brock explained that some raw material inputs have to be sourced from Canada due to “specific fiber quality demands and transportation efficiencies.”
Multiple companies in paper packaging expressed concerns over U.S.-Canada tariffs during February earnings calls.
Québec-based paper company Cascades described concerns with potential bilateral tariffs. About 11% of Cascades’ sales comes from products made in Canada and shipped to the United States. Economic fallout could “mean less shipments for every kind of product, whether it’s shipped in the U.S. or within Canada,” said CFO Allan Hogg. Meanwhile, roughly two-thirds of raw production for Cascades’ linerboard and medium occurs in the U.S.
Additionally, “cross-border intercompany transfers, including raw material used in our operations, increase this tariff exposure to roughly 15% of our revenues,” said CEO Hugues Simon.
Clearwater Paper CEO Arsen Kitch said in February that tariffs could affect the global flow of paper. Clearwater buys some inputs from Canada and exports products to both Canada and Mexico. And Smurfit Westrock addressed one big mill that it has in Canada, which exports to the U.S., which CEO Tony Smurfit said “would be very uncompetitive very quickly” under a 25% tariff.
U.S. metal business representatives have also expressed concerns. The Aluminum Association on Monday pointed to its statement from over a month ago emphasizing that the strength of the U.S. aluminum industry relies on imports from Canada.
“The U.S. industry sources around 2/3 of the primary aluminum it uses every year from Canada, since all U.S.-based smelters, even running at full capacity, cannot produce nearly enough metal to meet demand. And about 90% of U.S. scrap imports come from either Canada or Mexico,” AA said in February. “It would take billions of investment over decades to make the United States fully self-sufficient for its metal needs.”
And President and CEO Charles Johnson wrote Feb. 20 that “we must maintain tariff-free access to aluminum from Canada.”
Additionally, the U.S. imports about a quarter of its steel – mostly from Canada.
On Monday, Trump also amended an executive order he signed last month implementing a 10% tariff hike on China, increasing the ordered rate to 20%.
