Flexible Packaging Industry Continues to Battle Back Against Tariffs
At the start of the year, the tariffs imposed by the Trump administration on imported steel and aluminum led to manufacturers across the country seeing price increases on these important materials coming from overseas. In the packaging industry, the tariffs levied on aluminum foil — much of which comes from China and other foreign countries — became a particular cause for concern in the flexible packaging segment.
Now, as the final months of 2018 approach, Alison Keane, president and CEO of the Flexible Packaging Association, says the situation has become even more complex for members to navigate.
In the spring, the major challenge flexible packaging converters were facing was the tariff being applied to the thin-gauge aluminum foil that serves as an essential barrier layer in a variety of flexible packaging structures. In multiple market segments, including food, beverage, pharmaceutical and medical supplies, thin-gauge aluminum foil is needed for protection from oxygen, light, and other elements that could potentially be harmful to a product’s shelf life.
Keane explains that companies can submit an exemption request to the Department of Commerce, but she says she has only heard of a few companies successfully receiving the exemption. Many, she says, have not yet received a reply, despite submitting the request in the spring or summer.
“Most of the companies as of [mid-August], I checked in with them and their petitions were still out there,” Keane says. “Most petitions were in during June and July and still no word one way or the other.”
But what has made the situation even more difficult, Keane says, are the retaliatory tariffs being imposed by various countries on goods being exported from the United States to those nations.
Keane explains that Canada, Mexico and certain European countries were expected to be excluded from the tariffs initially introduced under Section 232 of the Trade Expansion Act of 1962. However, that turned out not to be the case, and as such, many of these countries have introduced retaliatory tariffs that include other materials needed in flexible packaging manufacturing, beyond steel and aluminum. Some lists of retaliatory tariffs even include polyolefins such as polyethylene and polypropylene, which are some of the most widely used flexible packaging substrates.
“In the end, the administration did not exempt [those countries], so now they are putting tariffs on exports from the United States into their countries as retaliation,” Keane says. “That is opening up a lot more than aluminum foil for us. They’re putting it on a host of different things. I’ve had to expand my aluminum foil converting list of interested folks and impacted manufacturers to pretty much all of our converters because a lot of the supplies or the exports they would sell to them including plastics are starting to get impacted.”
While the flexible packaging industry has faced challenges and roadblocks in achieving exemptions, Keane says the FPA has found allies on Capitol Hill that have taken action in support of the cause. Senator Ron Johnson, a republican from Wisconsin, for example, has been a vocal opponent of the tariffs, and Keane says he has even invited FPA members from his state to discuss the challenges they have faced during a roundtable meeting.
In July, ProAmpac, Bemis Co., and American Packaging Corp., all provided information to Johnson prior to a roundtable meeting held in Milwaukee. Representatives from American Packaging Corp., were on hand at the meeting to provide additional testimony. Keane says since this meeting, there has been additional political support offered to FPA members.
For example, Keane says Congressman Billy Long (R-Mo.) recently visited Bemis’s Missouri facility to discuss the impact of aluminum tariffs. Additionally, Congressman Phil Roe (R-Tenn.) toured Sonoco’s Tennessee facility and will host a similar roundtable discussion to the one that was held in Wisconsin, at which Sonoco will testify.
“There’s even some legislation that’s been circling around and it’s very bipartisan,” Keane says. “FPA has said that we fully support it. There’s a house version and senate version and what it would do is it would start to take back some of the trade authority that’s been given to the administration over the years and make sure that congress had a role in either approving it or making some changes before it went through.”
In the meantime however, Keane says the FPA will continue to help its members to understand all of the materials being impacted by the tariffs and continue to advocate on behalf of the industry.
“We’ll keep fighting the good fight and hopefully we can get some relief at some point before people lose too many businesses and too many employees,” she says.