After the United States raised the overall tariff rate on Chinese exports to the U.S. from 54% to 104% on April 9, it recently raised tariffs on some goods to 245%, a move that not only hit the costs of its own importing companies, but also led to sharp fluctuations in the global economic and trade order, with countries introducing targeted policies to stabilize their economies.
Breaking! UK plastic packaging tax abolished?Zero tariffs on 89 products
On April 13, local time, the British Ministry of Finance announced that in order to alleviate the pressure on business costs and stabilize economic growth, it would immediately launch a two-year and three-month tariff suspension plan until July 31, 2027, suspending tariffs on 89 imported goods, covering a variety of categories, such as food and beverages (spaghetti, fruit juices, and spices), and industrial products (plastic products).
According to the UK government announcement and media reports, the 89 categories of goods on which tariffs have been suspended are mainly concentrated in the following areas:
Food and beverages: pasta (original tariff 14%-30%), fruit juices (covering juice concentrates, NFC juices, etc., original tariff 14%-30%), spices (e.g., basic seasonings such as cinnamon and pepper), canned foods (e.g., tomato sauce, jam)
Daily necessities and industrial raw materials: plastic products (including packaging materials, household plastic parts, accounting for 22% of UK imports), gardening tools (such as flower pots, irrigation equipment), metal parts (such as screws, springs and other basic industrial products).
Other livelihood-related commodities: cleaning supplies (e.g., laundry detergent, soap), stationery and office supplies (e.g., paper, folders, some electronic product accessories (e.g., chargers, data cables))
British Prime Minister Starmer emphasized at the Downing Street press conference that the government will take “all necessary measures” to protect local businesses from the trade conflict. In addition to the tariff suspension policy, the United Kingdom has also simultaneously launched a £20 billion export financing support program, which establishes a special fund to assist enterprises affected by U.S. tariffs, and small enterprises can apply for low-interest loans of up to £2 million. This marks the first time that the United Kingdom has made large-scale use of trade policy tools to cope with external shocks after its exit from the European Union, highlighting its policy orientation of maintaining industrial competitiveness.
The UK's policy adjustment has a double significance: on the one hand, it is a proactive response to the disruption of the global economic and trade order, stabilizing the supply chain by reducing the cost of imports; on the other hand, it highlights the policy autonomy of the post-Brexit era - in the absence of the EU's trade protection umbrella in the context of autonomy through the development of tariff reductions and export support policies, attempting to reconstruct trade advantages in the U.S. and China. In the absence of the EU's trade umbrella, it tries to reconstruct its trade advantage in the gap between the U.S. and China.
With more countries may follow similar measures, the global trade pattern or enter a new round of adjustment period characterized by “regionalization, flexibility”. This initiative of the United Kingdom has a multi-dimensional impact on the packaging industry, the current packaging industry is in a period of transformation of environmental protection, the new regulations not only alleviate the short-term cost pressures on enterprises, but also to promote the industry's green upgrading and the application of intelligent technology, specifically related to the following four aspects:
1. Supply chain reconfiguration accelerates the evolution of increased competition
Tariff reductions for plastic products directly reduce costs for packaging companies
The tariff suspension covers industrial products (e.g., plastic containers, films, etc.), which are core raw materials for the packaging industry. In the case of juice packaging, for example, the tariffs on imported plastic bottles were previously 14-30%, and the suspension will reduce the cost by 15-25%. This will ease the pressure on packaging companies due to fluctuations in raw material prices, especially small and medium-sized enterprises (SMEs) that rely on imported plastics. The UK Plastic Packaging Duty requires that the proportion of recycled materials in packaging be no less than 30%, and the tariff reduction will enable companies to purchase compliant raw materials at lower cost, balancing environmental investment with profits.
Paper packaging is facing substitution pressure environmental protection trend is still dominant
Despite the falling cost of plastic packaging, the industry's transition to paper-based, biodegradable materials is being driven by the UK government's policy support for sustainable packaging (e.g., £30 million to fund plastic packaging innovation projects in 2022) and consumer preference (62% of UK consumers are willing to pay a premium for environmentally friendly packaging.) Frugalpac's paper bottles are experiencing a surge in demand, with orders for more than 100 million in 2021, reflecting the market's increased acceptance of alternative materials. Demand for Frugalpac's paper bottles is surging, with orders for more than 100 million bottles by 2021, reflecting increased acceptance of alternative materials. In addition, the development of recyclable transparent film at Oxford University and DS Smith's closed-loop recycling program are further undermining the long-term competitiveness of traditional plastic packaging.
Accelerated evolution of the trend towards regionalization of supply chains
The escalation of U.S. tariffs on China has led to a reconfiguration of the global supply chain, and U.K. packaging companies may shift some of their production capacity to their home or neighboring regions. For example, Smurfit Kappa has opened an e-commerce packaging lab in the UK to enhance local testing and production capacity; and Faerch has partnered with Tesco on a closed-loop recycling program to reduce its reliance on imported raw materials. This “nearshore outsourcing” strategy not only avoids trade risks, but also conforms to the post-Brexit policy of strengthening local industries.
2. Two-way transmission from the consumer to the enterprise side
End-consumer market: price-sensitive products may benefit
Tariff reductions may be passed through the supply chain to end prices. In the case of fruit juices, for example, zeroing out tariffs could save companies around £17m a year in tax, which if partially translated into lower retail prices could stimulate consumer demand and in turn packaging usage. However, this effect is limited by the UK's inflationary pressures (January 2025 CPI up 4.9% year-on-year) and consumer preference for environmentally friendly packaging, and companies will need to find a balance between cost optimization and product upgrades.
Export-oriented enterprises: policy dividends and trade barriers at the same time
The UK's simultaneous £20 billion Export Finance Scheme provides low-interest loans to packaging companies affected by US tariffs. For example, packaging companies in the automotive industry (such as suppliers of Jaguar Land Rover) can use the special fund to ease cash flow pressure. However, the US tariffs on China may indirectly affect the UK's packaging exports, and if Chinese companies turn to South East Asian markets, UK packaging companies will need to compete with local companies on cost and technology.
3. The double bind of environmental regulations and trade instruments
Hedging of Plastic Packaging Taxes and Tariff Policies
The UK's 2022 plastic packaging tax requires that no less than 30% of material be recycled, and this tariff reduction could make companies more inclined to use lower-cost virgin plastics. However, there is a contradiction in the policy design: if companies reduce their recycled content as a result of the tariff reduction, they may trigger the plastic packaging tax, which could lead to an increase in total costs. For example, if a drinks company reduces its use of recycled PET from 35% to 25%, it will save on duty, but it will have to pay a tax of £200 per tonne, which will increase its overall costs.
Circular economy policy accelerates industry transformation
The UK government plans to make packaging 100% recyclable by 2027 and is promoting a deposit return scheme for drinks containers. This requires packaging companies to move away from the 'disposable' model to 'design for recycling'. Greiner Packaging's K3® packaging, for example, separates plastic from paper for recycling through a removable cardboard sleeve, and this type of technology could become mainstream in the future.
4. Technological innovation and business model change
New Directions in Supply Chain Resilience Building
Both the epidemic and the trade war have exposed the vulnerability of supply chains, and companies have begun to diversify. For example, British carton companies were forced to increase prices by 6-7% in 2021 due to raw material shortages, and have since increased local recycling of waste paper (DS Smith recycles 300,000 tons annually) and established strategic reserves with Dutch and German suppliers.
New Exploration of Business Models
Companies are shifting from “selling packaging” to “packaging as a service”. For example, Faerch provides pallet recycling services for Tesco, reducing customer costs through recycling; Frugalpac promotes the paper bottle leasing model, in which consumers pay a deposit and return the empty bottles, and the company is responsible for cleaning and refilling them, a B2B2C model that reduces carbon footprints by 30%.
The UK's tariff adjustment is not only a short-term strategy to cope with the impact of global trade, but also a long-term layout to promote industrial upgrading. Packaging industry colleagues need to find a dynamic balance between cost optimization, environmental compliance and technological innovation, while paying attention to the spillover effects of the US-China tariff war and opportunities for global supply chain reconstruction!
