Latest flip-flopping over US tariffs increases uncertainty in European pulp & paper sector

The European pulp and paper (P&P) sector was thrown into further tariff uncertainty last week.

The series of announcements made it increasingly difficult to gauge how tariffs on goods imported to the US affect trade.

First, on May 23, US President Donald Trump threated to slap a 50% tariff on imports from the EU. This came just ahead of a call scheduled between EU Trade Commissioner Maroš Šefčovič and US Trade Representative Jamieson Greer. Then on May 25, after this call and another between Trump and European Commission President Ursula von der Leyen, it was announced that the two leaders had agreed to extend the deadline for trade negotiations until July 9. This suggested the 50% tariff was off the table for the time being.

But that was not the end of it: on Wednesday May 28 the US Court of International Trade ruled that the tariffs Trump had imposed in April under the 1977 International Emergency Economic Powers Act (IEEPA) were illegal. This included a 10% baseline tariff on all imports to the US, as well as proposed higher “reciprocal” tariffs for entities that the US believed to be the “worst offenders.”

Despite this, a US federal appeals court ruled on Thursday May 29 that Trump’s global tariffs can remain in place for the time being, while it considers the White House’s appeal against the May 28 decision.

Sentiment from packaging market sources

Market sources told Fastmarkets that the ever-changing tariff situation was making it impossible to plan and make medium- to long-term business decisions.

“I have told my team we won’t plan anymore. We were spending so much time and energy on it that it simply isn’t worth it. In any case, you just keep having to change them,” a packaging company’s chief executive officer said.

“We are working on scenario-based planning,” a source at another packaging company said. “In this scenario we do this, in another scenario we do something else,” they said, adding that the situation was changing so rapidly that companies were having to adapt.

Sources canvassed by Fastmarkets were reluctant to dismiss the 50% tariff mentioned by Trump last week. However, they said they thought a 10-20% tariff would be more likely in the end. The 50% rate would pretty much kill trade between the two partners, but the US President may not be willing to return to 0% if he wins his case in favor of tariffs.

The US and the EU are major partners in the pulp & paper trade

The EU imports around 900,000 tonnes per year of pulp from the US, mostly fluff pulp. It also imports approximately 600,000 tpy of paper and board. On the other hand, the EU exports a lot of paper and board to the US, about 1.6 million tpy, and a lesser amount of pulp, around 350,000 tpy.

Cartonboard is one major item the EU exports to the US. A source at one cartonboard company involved in export trade said they did not think there had been a major impact on trade flows so far.

Interestingly, German packaging company WEIG just announced its entry into the US market, where it will be marketing GT and GD grades of cartonboard, including its Pirol, Kiwi, Ibis and Unipack/UnipackF brands.

In a statement on May 26, WEIG said mid-sized converters in the US were “actively seeking high-quality, European alternatives to diversify their sourcing options.”

Europe also exports mechanical and woodfree paper to the US. Market sources were concerned that if tariffs caused more of these grades to remain in Europe, it could increase the overcapacity there.

Meanwhile, sources were also concerned about how tariffs will affect the wider economy, and how the current uncertainty might dampen demand, which is already seen as sluggish for many pulp and paper grades.

“Industry data is showing [order intake] is stable, but at a lower level than before,” one paper board producer said. “We have to ask ourselves if this is the new normal.”

Going into 2025, market sources had been hopeful of a pick-up in demand compared with the prior year.

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