March 20, 2025

Despite general optimism, questions and concerns linger about the new administration and its impact

Editor’s note: This article was written prior to the imposition of tariffs on imports from Mexico, Canada, and China. AICC will continue to share new information as it becomes available. Make sure to read inBox, AICC’s weekly electronic newsletter, for the latest information.

Manufacturers are expressing a renewed sense of optimism as Donald J. Trump once again finds himself in the White House. The policies of his previous administration, along with his preelection promises, suggest an emphasis on lower taxes and a willingness to extend—in some form—the benefits of the Tax Cuts and Jobs Act (TCJA), scheduled to expire at the end of 2025. This would be good news for boxmakers.

Yet, history suggests not every campaign promise will be kept, and Trump, in particular, is easily distracted. Will lower taxes become a reality? How will the economy respond? And what will the administration’s bullish insistence on import tariffs mean for boxmakers whose supply chain and sales channels sometimes depend on cross-border trade?

Moving Target

Rohit Kumar is PwC’s national tax office co-leader and a former deputy chief of staff to U.S. Senate Republican Leader Mitch McConnell of Kentucky.

“I spent 15 years on Capitol Hill working on tax policy and had a hand in basically every piece of tax legislation, from, say, 2002 to 2013,” Kumar says. “The things I learned help me advise PwC clients on—to use a hockey example—not where the puck is, but where the puck is going when it comes to tax policy.”

In Kumar’s view, the current administration, combined with a Republican-led U.S. House and U.S. Senate, comprises a government inclined to extend expiring tax relief such as the TCJA for as long as possible.

“What we don’t know is the duration of that relief. Will it be seven or eight years? Or as short as four or five years? That’s something they have yet to figure out,” he says.

On the other hand, he adds, “I wouldn’t say that a Republican House, Senate, and White House would be completely allergic to an extension of tax cuts being paired with offsetting tax increases. But the scale of offsetting tax increases that you would get is clearly less than that which would have been politically available had Vice President [Kamala] Harris won or had Democrats taken the House or Senate.”

“Trump ran on tax cuts, so I think we’re going to be in a lower-tax environment for the next two years at least. And that should be good for all small businesses, including manufacturers,” says Mitchell Klingher, partner at Klingher Nadler LLP.

Klingher suggests boxmakers keep a close eye on how the administration handles several key tax areas. First, he notes, “the TCJA included a big estate tax exemption, which may or may not go away at the end of 2025. So, I’m advising my clients to take advantage of it while it’s there, just in case.”

This won’t be a top-of-mind exemption for every owner. But for boxmakers wanting to pass down their family business, it may be critical.

“The biggest challenge in a lot of small businesses is being able to pay the estate tax when a business gets transferred from one generation to the next,” Klingher acknowledges.

“If you don’t have that big estate tax exemption, guess what? Depending on the size of your business, your heirs may have to come up with millions of dollars to pay estate taxes, which might force them to sell. If you’re close to the point of passing on your business, 2025 offers an opportunity to do that. Let’s not take a chance on the vagaries of what Congress may or may not do.”

For the rest of the tax picture, Klingher believes there’s a good chance the administration will reinstate 100% bonus depreciation. “That’s good for manufacturers—especially boxmakers—since the business is very capital-intensive. Cash flow is king when it comes to equipment acquisition. So, if a manufacturer can get a big jump on the cash flow by saving taxes, that’s really helpful,” he says.

“The other biggie is the QBI, the qualified business-income deduction, which effectively lowers the tax rate for people who are manufacturers from 37% down to 30%. Hopefully, that will get extended, as well.”

For boxmakers who engage in research and development (R&D), Kumar believes some R&D-specific tax relief may be in sight.

“Starting in 2022, your domestic R&D expenses had to be spread out over five years, rather than being deducted immediately in the year in which they were incurred,” he says.

“There was a furious but ultimately failed effort to reverse that, even temporarily. So, I think in 2025 there will be broad bipartisan interest—even though this is likely to be a partisan, Republican-only tax bill—in trying to restore at least temporarily, if not permanently, the immediate deduction for domestic R&D expenses, which should provide a fair bit of cash tax relief to R&D-intensive manufacturers.”

Taxing Problem of Tariffs

Much of this tax relief will be possible, in theory, because of a corresponding emphasis on tariffs on internationally sourced goods delivered into the United States. But if tax policy is a moving target, tariffs are even more so.

Trump announced in late November 2024 that he would impose day-one tariffs of 10% on all imports from China and 25% on imports from Canada and Mexico. Two months into his term, the China tariff is now reality, along with across-the-board tariffs on imported steel and aluminum. However, extensive corporate pushback has led the administration to table its threat of tariffs on Mexico and Canada— at least temporarily. What exactly will take effect remains a mystery, with a variety of schemes currently being discussed.

“The tariffs,” Kumar says, “are a real wild card here.”

Although BoxScore spoke to Kumar in November 2024, that fact has not changed. And the resulting uncertainty is not limited to what goods and what countries might face new or higher tariffs. “It is also to what degree do foreign governments retaliate with countervailing duties and tariffs on exports from us into their markets,” Kumar notes. “If you’re a manufacturer who has a foreign market that you sell into, your products might be subject to retaliation.”

To further complicate things, Peter S. Goodman of the New York Times reported in February 2025 that Trump had begun a process “to impose so-called reciprocal tariffs on American trading partners.” This would mean that whatever taxes/tariffs U.S. companies face when exporting products to another country would be applied on the U.S. side toward imports from that country, potentially increasing the costs of imported raw materials and other goods.

At this time, though, very little seems set in stone, which is adding challenges for boxmakers wanting to prepare for potential supply chain issues or to develop plans for growing their business across borders. There are too many variables and too little certainty.

When assessing the tariff situation, Klingher expressed certainty about just one side of the issue. If Trump’s original call for 25% tariffs on trade comes to pass with countries neighboring the United States, “the proposed new tariffs are going to wreak havoc,” he says.

“I’ve got some clients who are manufacturers in the Northwest,” Klingher explains. “They’re buying their sheets from a sheet feeder on the Canadian side of the border. If they get hit with 25% tariffs on those sheets, that’s going to have a terrible negative effect on their business. On the flip side, there are Canadian companies that are buying roll stock from American mills, and they’re going to try not to. There’s lots of paper around; they’ve got lots of choices.

“So, if you’re a Canadian manufacturer and you have a choice of buying U.S. roll stock or Canadian roll stock, what are you going to do?”

‘Interesting’ Year

With a number of critical decisions involving tax policy and tariffs still to come, “watch and wait” seems to sum up the current advice for boxmakers.

“At the end of the day, other than making an estate tax move, I would say, bide your time,” Klingher advises.

“If you’re on the fence about buying new equipment or expanding into new business, be wary until the tax situation becomes clearer.”

Looking ahead, Klingher also encourages boxmakers to consider their broader responses to the current economy, which may or may not be greatly impacted by tax breaks and tariffs.

For example, he says, “I think the key issue in the box business right now is sluggish demand and the constant pressure of the integrated companies to raise the price of paper, even when the demand doesn’t seem to be there. That’s the biggest anomaly that everybody’s going to have to deal with in 2025.

“And if tariffs come into play, forcing manufacturers to raise prices, then who knows what will happen? We’re in a situation where the laws of supply and demand have gone out the window. Supply is high, demand is low, but prices are going up. That doesn’t make any sense.

“It’s going to be an interesting year.”