Even Cardboard Boxes Aren't Immune to U.S.-China Trade Tensions

(Bloomberg) -- While Donald Trump’s trade war with China has already caused losses for American farmers, its impact is now starting to trickle down into a surprising market: the cardboard box.

While there are no tariffs on the boxes themselves, the packaging is used by U.S. food companies to ship goods that are now facing Chinese duties. As exports wane, that’s trickling through to demand for the boxes made by Memphis-based International Paper Co., said Chief Executive Officer Mark Sutton. While the financial toll from the small number of products has so far been “limited,” the company has “heightened” concerns that the dispute will have secondary effects on its business, he said.

Some tariffs “end up being in our supply chain,” Sutton said by telephone Thursday. “Both China and the U.S. sort of need each other, and we just hope the elected officials can arrive at the conclusion before too much damage is done.”

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China’s tariffs have increased pressure on American protein exporters and could mean less demand for cardboard boxes, Sutton said. Some International Paper customers in the food segment are still figuring out what to do with the supplies that used to go to China, he said.

“That’s all evolving right now,” Sutton said. “You can’t change supply chains immediately.”

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Patrick McKiernan

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