WASHINGTON — Packaging costs already on the rise under tariffs imposed earlier this year could further balloon this week if President Donald Trump follows through on a promised new 50% levy on steel and aluminum products.
At a May 30 rally in Pittsburgh to announce a pending deal between US Steel and Japan’s Nippon Steel, Trump said he would double tariffs on steel imports beginning June 4. The president later said on social media that plan also would include doubling tariffs on imported aluminum and aluminum products.
In March, the White House imposed an additional 25% tariff on most steel and aluminum imported to the United States, alarming food industry groups that rely heavily on imports of those metals for packaging, from beer and canned beverages to canned soups, fruits and vegetables.
Food companies including The Campbell’s Co. and Conagra Brands have said the new tariffs and rising packaging costs are pushing them to renegotiate with suppliers, re-source supply chains and, ultimately, could force them to raise product prices for US consumers.
“The two areas that were impacted the most are tinplate and aluminum,” said Sean Connolly, president and chief executive officer of Conagra, at the May 13 Goldman Sachs Global Staples Forum. “We can’t get all of our materials from the United States because there’s no supply.”
Conagra’s major brands include canned grocery-store staples like Chef Boyardee and Reddi-wip. While Conagra agreed to sell Chef Boyardee to Hometown Food Co. in early May, the transaction has not closed.
“It’s been challenging times for the last few years because we had the inflation super cycle where we’ve seen cumulatively just an epic level of inflation, which then led to inflation justified pricing in the industry, and that really stretched the consumer,” Connolly said. “Now what we’ve got is a whole new level of uncertainty in the last several months that has emerged.
“How much of this can we negotiate with our suppliers? So, we have to split the tariff cost. … It makes it very difficult if you ultimately conclude that you want to talk to a customer about a targeted price increase.”
Mick Beekhuizen, CEO of Campbell’s, said in a second-quarter earnings call that the tariffs on steel and aluminum, as well as broader levies on imported ingredients, could prompt the company to pass along some additional costs to consumers.
“Depending on how long these tariffs would be in place, as well as the extent of the tariffs, we might need to take other actions, and that could include pricing for some of our products,” he said. “Now that being said, I’m obviously going to be very focused to make sure that we provide a good value to our customers.”
Business groups and officials for top US trading partners were quick to denounce the White House’s new plan for a steel and aluminum tariff increase to 50%.
“Unwinding the efficient, competitive and reliable cross-border supply chains like we have in steel and aluminum comes at a great cost to both countries,” said Candace Laing, president of Canada’s Chamber of Commerce, following Trump’s announcement.
On May 31, the European Commission said it was planning retaliatory steps.
“This decision adds further uncertainty to the global economy and increases costs for consumers and businesses on both sides of the Atlantic,” the commission said. “The European Union is prepared to impose countermeasures, including in response to the latest US tariff increase.”