The U.S. government’s recent decision to charge a 25% import tariff on various goods from Canada, including baled waste paper, has caused shockwaves among exporters and players in the recycling business. This is part of a wider trade policy that seeks to protect local industries but could have serious consequences for Canadian suppliers and American paper manufacturers alike.
A baled wastepaper is perhaps the most important raw material that drives American paper production. A lot of American mills import Canadian wastepaper to keep production running. The newly imposed tariff is bound to increase the prices of Canadian waste paper and make American paper more difficult to sell. As a consequence, American manufacturers might turn to other vendors or increase the use of local materials, causing a breakdown in the supply chain and elevated prices for production.
This tariff will be a barrier for Canadian exporters trying to sell to new markets. Many companies will suffer from lower sales and shrinking profit margins, which compels them to reposition themselves out of the United States market. The Canadian government has reacted by offering various forms of support such as financial aid and programs aimed at minimizing the impact of these changes through greater market diversification.
Eventually, these tariffs will alter trading patterns in the waste paper industry. Should U.S. paper mills decide to significantly stop purchasing waste paper from abroad, it would force them to depend upon domestic resources. Canadian companies may actively seek domestic recycling capabilities or trade relationships with other international markets.
Thus, the imposed tariffs underline some of the difficulties with international trade and its widespread economic effects. While the United States is attempting to protect its industries, there is likely a disturbance to the established supply chains with additional costs, which include unintended consequences for American and Canadian businesses involved in the wastepaper industry.
