Everything in stores, except fresh produce, comes in a package. Bottled water, dairy products, electronics, and even large appliances need protective packaging to prevent damage during transportation. The cost of packaging depends on several factors, including raw materials, labor, and transportation. Tariffs can significantly affect these costs and create a ripple effect throughout various industries and sectors.
Increased Costs Due to Tariffs
Laszlo Horvath, an associate professor at Virginia Tech and director of the Center for Packaging and Unit Load Design, explains that tariffs increase costs in several ways. Many packaging molds are manufactured overseas and cost millions of dollars. Hence, if tariffs rise before a mold arrives, the company must pay more, leading to higher costs that are passed on to consumers. This increase affects both businesses and individuals, as prices for packaged goods rise.
Effects on Shipping and Transportation
Tariffs can also affect how products are transported. A product originally shipped by sea might need to move by rail instead. Each mode of transportation requires different packaging solutions. A package designed for ocean freight may not withstand the vibrations of a train journey. Companies must redesign packaging to ensure products remain intact during transit. These changes increase costs. Businesses may pass on these costs to consumers.
Handling and Damage Risks
A product shipped from one state to another spends less time in transit and undergoes minimal handling. However, an imported product travels through multiple locations, including ports and warehouses. Each transfer increases the risk of damage. Packages must be designed to withstand rough handling, climate changes, and extended storage periods. Adjustments to packaging due to tariff-related shipping changes could further increase costs.
Packaging Design Considerations
Companies must consider various environmental factors when designing packaging. A product moving from a humid climate to a cold region needs materials that can handle temperature fluctuations. Nevertheless, if tariffs alter supply chains, companies must modify packaging designs to meet new transit conditions. These adjustments require additional investment in research, testing, and materials, which can make packaging more expensive.
Future of Packaging and Trade Policies
Impositions of or changes in tariffs and the rollout of new trade policies influence packaging decisions. These necessitate companies to remain flexible and adapt to evolving regulations and requirements. The cost of packaging is not merely about the materials used but also about transportation, handling, and regulatory requirements. Businesses must anticipate these changes to remain competitive while ensuring that products reach consumers safely.