RaboResearch: US paper braces for tariffs and trade disruptions as Trump takes charge

The return of Donald Trump to the White House is shifting US policies toward tax cuts, market deregulation and import tariffs. Rabobank’s RaboResearch finds that these changes will likely drive higher inflation, slower GDP growth and increased budget deficits, impacting industries like paper packaging.

Yesterday, Trump was inaugurated as the 47th US president. In his address, he said the “golden age of America begins right now.” 

While general deregulation efforts might curb inflation in the short term, RaboResearch predicts that the administration’s goal of lowering energy costs through deregulation will present challenges related to global supply and demand dynamics.

We speak to Xinnan Li, vice president for Food and Agriculture Packaging and cold chain analyst at RaboResearch, about what a rise in US import tariffs could mean for the packaging industry, especially paper products. 

Li says that while the current 25% tariffs imposed by the US on Chinese paper products have little direct effect on the national economy, a significant impact would be felt if China decided to retaliate to the US’ potential new 60% tariff.

While the current US tariffs imposed on Chinese paper products have little direct effect on the national economy, Li predicts a significant impact if China decided to retaliate against a potential import tariff increase.“China’s retaliatory tariffs could hurt US paper exports, coupled with strong USD,” she tells Packaging Insights.

High-tariff impacts

Li says elevated import tariffs will likely lead to a high-tariff environment and possible retaliation from China on US paper products. However, it is not yet clear what action Trump will take. 

“In his previous term, this is exactly what happened, with several rounds of tariff increases.” 

Last month, packaging analyst Neil Farmer predicted that a rise in US tariffs on Chinese plastics imports would create “complex issues,” as China is responsible for 32% of the world’s plastic materials output. 

Effect on oil prices 

Meanwhile, RaboResearch expects that further US trade tariffs will negatively affect the country’s economy, leading to higher inflation and, therefore, lower GDP growth, according to a report issued in November 2024(link).

“Packaging cost and production will likely go up as overall inflation rises. Rabobank’s proprietary tool suggests continued growth of corrugated demand growth of 3% CAGR in the next 24 months,” says Li.

Furthermore, RaboResearch expects flat to slightly lower energy costs to marginally offset inflation.

Despite Trump’s plans for increased energy production, analysts find current prices do not incentivize US producers to significantly expand oil production. 

OPEC may marginally increase production to keep US drilling flat, leading to modest downside pressure on oil prices through 2025. RaboResearch predicts this will help offset food inflation through logistics and packaging — specifically plastics. 

While the anticipated strength of the US dollar creates opportunities for export competitors, RaboResearch says that the prospect of a universal US tariff could negatively impact import demand into the US market.