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Impact of Trade on Independent Paper Packaging Converters

By AICC Staff

June 4, 2019

width=300For an independent corrugated or carton converter, trade policy might seem remote from the daily challenges of attracting new business or keeping existing customers satisfied. Yet, changes in international trade can be at the core of why it is so hard to find new customers, or why existing customers order fewer packaging materials. But something as far from the shop floor as changes in the value of the U.S. dollar compared to trading nations’ currencies can be a major culprit.

If the value of one U.S. dollar becomes 25 percent stronger than the value of, say, one Canadian dollar, then that U.S. dollar goes 25 percent further in buying a wheel of cheese from Canada—and the corrugated packaging made in Canada that protects it during shipment. So, a customer decides to buy the less expensive cheese at the grocery store, and the cheesemaker in Wisconsin is out of a sale—and doesn’t need a box for that unsold cheese. Now, suppose that cheesemaker in Wisconsin tries to sell his cheese in Germany. For the German grocer to buy that cheese, he must buy dollars with his local euros, which now buy 25 percent less. That makes the cheese from Wisconsin more expensive than other cheeses in the German’s dairy case, and so that cheese is not exported; again, the cheesemaker is out of a sale, and his packaging partner doesn’t make the box to package that cheese.


Actually, that 25 percent appreciation is exactly what has happened to the U.S. dollar relative to a broad basket of global trading currencies since the middle of 2014. And it remains that overvalued now compared to economic fundamentals of the otherwise competitive U.S. manufacturing sector.

Scale the cheesemaker’s lost sale up to the $40 billion annual U.S. market for cheese. In 2016, the annual trade deficit for cheese products doubled from $50 million to $99 million—$49 million of lost business opportunity for both U.S. cheese producers and those who make their packaging.

Nondurable goods account for about 75 percent of U.S. corrugated demand. The chart on above shows the value of U.S. trade in nondurable goods—here, the sum of food, beverage, clothing, paper, and chemical and plastic products. The trade balance is the difference between exports and imports. First, the chart shows that our country imports more nondurable goods than it exports. Last year, exports amounted to $372 billion, but imports were a larger $593 billion. The trade balance was a negative $221 billion. To learn whether manufacturers and boxmakers were better off last year than they were five years ago, we need to evaluate whether exports grew and imports shrank over those years.

In 2013, exports were valued at $364 billion, so they did grow, but at a paltry rate of only 2.3 percent over the five-year period. Imports, however, totaled $489 billion in 2013 and grew by a tenfold-larger 21 percent during the past five years, reducing by $104 billion the amount of packaged goods that Americans bought from domestic producers. On balance, over the past five years, the $8 billion growth in exports was swamped by the surge in imports, resulting in a $96 billion, or 77 percent, decline in the trade-related market that could have been supplied by U.S. producers and protected by U.S.-made corrugated boxes.


Food products are packaging-intensive and accounted for nearly one-quarter of 2017 box shipments, according to the Fibre Box Association. They also amounted to 18 percent of last year’s nondurable goods exports. The chart on above shows the trade performance of these commodities over the past five years.

In 2013, U.S. food producers supplied a market in which exports of $69 billion exceeded imports of $53 billion by $16 billion. As the chart above depicts, that favorable trade balance eroded over the five years during which the U.S. dollar strengthened by 25 percent so that last year’s trade balance was a negative $1 billion, a $17 billion decline in market opportunity.

The same trend of stagnant or declining exports overtaken by rapidly rising imports that characterized nondurable-goods trade appears here, wiping out a favorable trade balance and the opportunity to supply packaging to it. Exports declined by 3.5 percent since 2013, while imports advanced by 29 percent, decreasing from the favorable food trade balance in 2013 by 77 percent.

Certainly, more factors than just trade influence the size of packaging markets available to domestic independent corrugated and carton producers. However, in the wake of the U.S. dollar’s 25 percent appreciation, adverse trade impacts rank among the largest.

PortraitDick Storat is president of Richard Storat & Associates. He can be reached at 610-282-6033 or