As we went to press, the U.S. and the European Union ended months of uncertainty by signing a new deal on tariffs and avoiding a potential trade war. The agreement set the tariff rate at 15% for most EU imports to the U.S., significantly lower than the 30% rate initially threatened by U.S. President Donald Trump. The EU also committed to significant purchases of U.S. energy products and investments in the U.S. economy. Most EU tariffs on industrial goods will be eliminated.

Just prior to the agreement, talk of trade and tariffs was a major topic of discussion at INDA’s annual World of Wipes conference. Most attendees agreed the biggest problem with the tariff situation is “uncertainty.”

Months into his second term, Trump enacted a series of steep protective tariffs affecting nearly all goods imported into the U.S., leading to an increase in estimated tariffs from 2.5% to 27%, the highest level in over a century. During this time, Trump has threatened (and continues to threaten in some cases) steep tariff rates against many of the U.S.’s key trading partners, before backing down and negotiating more balanced agreements, similar to how his deal with the EU worked.

The U.S. has a long history with tariffs, which represented the country’s main source of income until at least 1861 when it first implemented a federal income tax. Today, tariffs represent just a small percentage of the federal budget, and many economists feel that high tariffs would do more harm to the economy than good. In fact, in its most recent earnings call, Pampers maker Procter & Gamble said it would be raising prices on about 25% of its product portfolio to offset $1 billion in additional tariff costs.

For nonwovens, a 30% tariff would increase demand to the point where U.S. demand would create a sellers’ market—a situation that would increase prices throughout the supply chain and trickle down into consumers’ wallets. And, the uncertainty of the tariffs—as well as other market conditions—makes investment risky, to say the least.

Let’s hope implementation of a 15% tariff on nonwovens imports will be a decent enough compromise to support U.S. manufacturers as they compete against foreign competition and reduce the trade deficit without completely destroying the market, driving consumer pricing sky high or damaging the strong collaborations makers and users of nonwovens have shared across the globe.

As always, we appreciate your comments.

Karen McIntyre
Editor
kmcintyre@rodmanmedia.com