Geopolitics and packaging: Impact of tariffs on the global industry
As a result of the recent US presidential elections, a move toward protectionism in major economies seems inevitable. The global packaging industry is likely to be impacted. Some would argue that we should be concerned by this likely change, but I would refute this assessment.
International trade in goods and services will remain strong in 2025. The overall global connectedness index, which measures international activity against domestic activity across all categories, is at a record high. This is reflected in the global reach of companies in the packaging sector.
For example, as a result of the recent US$8.43 billion Amcor/Berry deal, the combined group will have over 400 production plants and serve customers in over 140 countries, representing 70% of all countries in the world. This is the apogee of globalization, bringing higher quality added value packaging to more economies, increasing sustainability and circularity and, as a result, helping to reduce food waste.
More deals of this type are likely to follow over the coming weeks and months.
Nevertheless, the likely US trade tariffs and consequential protectionism could see some realignment of business relationships and trading patterns.
Tariffs on trade with China
China is responsible for 32% of the world’s plastic materials output. If president-elect Donald Trump imposes a 60% tariff on Chinese imports to the US, as seems likely, and a 20% tariff on the rest of the world, this is going to create complex issues.
Several major packaging groups such as Amcor, Sealed Air and Tetra Pak have substantial operations in China. How their operations will develop is an interesting point for discussion. However, global players usually find a way to navigate difficult circumstances, as the following illustrates.
Packaging companies and Asia-Pacific
Amcor opened a state-of-the art manufacturing plant in Huizhou, China, in December 2022, to meet growing customer demand throughout the whole Asia-Pacific region.
Packaging industry analyst Neil Farmer.With an investment of almost US$100 million, the 590,000 square-foot plant is the largest flexible packaging production operation in China. It will leverage the expertise from the company’s Asia-Pacific Innovation Center in Jiangyin, China, helping to accelerate the development of added value packaging solutions with innovative testing and analytical facilities.
Both operations are a testament to Amcor’s commitment to China and the whole Asia-Pacific, which is likely to survive any trade wars that might ensue.
Similarly, Sealed Air Corporation, a US$5.4 billion revenue global packaging player, has a newly reinvented Asia-Pacific Custom Experience Center (known as Packforum APAC) in Shanghai, China.
The facility celebrated its 15th anniversary in March 2023. The purpose of the operation is to enable visitors to experience packaging excellence and innovation and gain insights into the latest consumer and industrial trends for the whole region. It brings together an integrated showcase of solutions across all of Sealed Air’s brands including Cryovac, Liquibox, Sealed Air Protective Packaging and Autobag.
The facility enables Asia-Pacific customers to innovate in automated sustainable packaging solutions across the whole portfolio of Sealed Air’s brands. Any trade war with China is unlikely to damage the work of this type of operation.
Tetra Pak similarly has extensive operations in China and Asia-Pacific. It has been active in China since 1972. The company’s commitment to the country is illustrated by China Mengniu Dairy Company being awarded “lighthouse factory” certification in November 2024 by the World Economic Forum for its world-first fully intelligent dairy factory in Ningxia, China.
The site was recognized for its innovation, utilizing Tetra Pak’s end-to-end solutions, together with a network of specialists and partners. The advanced technologies supplied by the company are seen as shaping the future of the dairy industry in China, helping to improve the efficiencies of the entire processing and packaging operation.
These examples illustrate how global players with financial resources, critical mass and investment in outstanding technology and R&D will remain soundly based in China, even if any tariff barriers and changes in trading patterns occur.Vietnam’s packaging industry has grown substantially but US tariffs on exports could impact the country’s growth, says Farmer.
For SMEs, the position could be more demanding.
There are signs of caution among European companies doing business in China. This will mean existing supply chains and business channels are likely to experience realignment over the coming year, which will lead to business opportunities in the packaging sector in countries such as Vietnam.
Vietnam’s packaging industry
Vietnam’s packaging industry has grown substantially over recent years. The country is benefitting from a stable economy, growing urbanization and rising consumer income. Chinese manufacturers have moved production to Vietnam since Donald Trump’s first term as US president, when he initially raised tariffs on Chinese imports.
The Vietnamese packaging market is valued at over US$5 billion. Analysts say it is growing at a rate of 10% per annum. In 2021, Vietnam exported US$2.7 billion worth of packaging products. The main export markets are the US, the EU and Japan, with America the single largest destination.
With a relatively cheap labor market and free trade policies, Vietnam seems set for further growth. However, US tariffs on exports could impact this outcome.
Donald Trump plans to impose tariffs of 10–20% on imported goods and this would affect Vietnamese exporters. There are concerns that US-Chinese rivalry, which will become more intense over the coming months, may cause Vietnam to take sides between the US and China.
The Vietnam-US relationship is important but it will face challenges under the new “America First” strategy. The vibrancy of Vietnam’s packaging sector could be challenged over the coming year. However, the country’s economy will continue to flourish and offer new opportunities for progressive companies.
The US$1 trillion global packaging sector will remain an industry full of growth in 2025, irrespective of any protectionist trade policies.
