U.S. tariffs impose 50% rates on plastic bags and closures
In July, the United States imposed a 50% tariff on polyethylene bags, stoppers, lids, caps and other tableware from Canada. About 20% of the roughly $15 billion in annual U.S.-Canada plastics trade now faces the 50% duty. There are also 15% tariffs on various molds used to make plastic, metal and rubber products.
The Section 338 duties stack on top of base tariffs and apply even to goods that qualify for free trade under the USMCA. North American polyethylene and polypropylene producers rely on ethane, which is cheaper than the naphtha used in Asia and Europe. Because of Strait of Hormuz disruptions, global demand for lower‑cost U.S. polyolefins has risen, pressuring converters that can no longer buy cheap domestic resin.
“There's people eating margin right now that make it very challenging to deliver on yearly or quarterly results,” Jim Owen, senior packaging and logistics analyst at Rabobank said.
“We spent 30 years making this a well-oiled machine with free trade on plastic and molds and resins and additives,” Jim Owen, senior packaging and logistics analyst at Rabobank said.
Fiber and metals aren’t the only packaging materials and products to get caught in the United States-Canada trade war. As companies sift through tariff codes they’re learning of the numerous plastic items that are included.
What we know
Polyethylene bags are listed in Canada’s reciprocal tariffs order at a 50% tariff rate, as are stoppers, lids, caps, other closures and table ware.
There are also 15% tariffs on various molds for manufacturing plastic, metal and rubber products.
Owen noted in a recent report that about 20% of the approximately $15 billion U.S.-Canada plastics trade is exposed to the 50% tariffs that the U.S. imposed on $20 billion of Canadian goods in July.
The Section 338 duties stack on top of base duties and apply even to goods covered for free trade under the U.S.-Mexico-Canada Agreement, he explained.
The war reached the six-month point in late August, and polyolefins have been bearing the brunt of the effects this year.