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Key takeaways
The European Union and the United States reached a deal which imposes 15% tariffs on most European goods exported to the US just a few days ahead of the August 1 deadline, US President Donald Trump and European Commission president Ursula von der Leyen announced on Sunday July 27.
As part of the deal, the EU committed to buying $750 billion worth of US liquified natural gas, oil and nuclear fuel, and hundreds of billions of military equipment, while European companies will invest further $600 billion in the US.
The 15% rate will apply across most sectors, including cars, semiconductors and pharmaceuticals. A zero-for-zero tariffs was agreed on a number of strategic products, including all aircraft and component partscertain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials.
No retaliatory tariffs by the EU on US goods were announced and the 50% tariffs on EU steel and aluminium will remain.
The uncertainty around tariffs is particularly impacting the pulp and paper market for two reasons: first, it is preventing companies from taking investment decisions and second, it is partly redirecting Asian exports to the US towards other markets, including Europe. Tariffs are also reducing trade, as well as consumer confidence.
Many market sources told us that the constantly changing tariff situation, with tariffs announced, then postponed, then increased were making it impossible to plan and make medium- to long-term business decisions.
As for Asian exports, initially very high US tariffs on Chinese exports provoked a surge in cartonboard exports from China to Europe. European imports of Uncoated woodfree paper also started to increase in March as some products previously destined for the US found their way into Europe.
Most market participants we speak to on a daily basis say that it is very difficult at the moment to plan anything because the market situation is very uncertain. They’re waiting to understand what the outcome of the negotiations between the EU and the US will be before taking any decision.
Obviously the two main concerns for European producers are even more overcapacity in some grades if exports to the US were to decrease and increased imports of paper & board from Asia in an already saturated market.
Europe has a marginally negative trade balance with the US: in 2024, it imported 2.6 million tonnes of pulp & paper from the US, while it exported 2.3 million tonnes of P&P to the country. The largest trade deficits appear to be around pulp (-975,000 tonnes) and containerboard (-310,000 tonnes, mostly kraftliner).
Pulp buyers in the US might be the ones who will pay the bill for higher pulp imports from the EU. According to some market sources, US-based pulp buyers might change their buying pattern over time. For example, more Canadian pulp might go to the US and less to China, leaving more room for European NBSK in China.
On the other hand, Europe has a surplus in graphic paper and boxboard sales, and this might cause more graphic paper and cartonboard to be sold in Europe, where overcapacity is very high. Furthermore, more graphic paper and cartonboard volumes might arrive in Europe from Asia, thus further increasing overcapacity.
In the tissue market, considerable volumes of Asian exports to the US could be replaced by exports from Canada, Latin America, Turkey and potentially the UAE and Saudi Arabia. Therefore, more Asian tissue volumes might be redirected to Europe.
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