The pulp and paper (P&P) industry in Europe is currently facing a serious challenge to carefully assess the possible impact of potential US tariffs. Initially, US President Donald Trump announced a plan to impose a flat 10% tariff on all goods imported into the US. He then went further, proposing "reciprocal" tariffs of up to 20 per cent on countries and regions he deemed to be guilty of serious trade violations, particularly the European Union.
However, on April 9, the Trump administration changed tack, announcing a 90-day suspension of the tariffs, but still retaining the 10 percent tariff on imports. Notably, most goods from Canada and Mexico will be exempt from tariffs, but this exemption will only apply to goods that meet the relevant provisions of the United States-Mexico-Canada Agreement (USMCA).
Overall, Europe has a slight trade deficit with the United States in the pulp and paper sector. According to Eurostat data for 2024, Europe imported 2.6 million tons of pulp and paper products from the United States, while it exported 2.3 million tons to the United States in the same period. Specifically, the trade deficit is mainly concentrated in the two areas of pulp (deficit 975,000 tons) and box board paper (deficit 310,000 tons, mainly cattle cardboard). Europe, on the other hand, has a trade surplus with the United States in printing paper and certain types of box board paper.
Jorie Ringemann, Director general of the European Paper Industry Federation, said: "In light of the tariffs announced by the United States, we are currently working closely with the European Commission to be able to respond quickly, robustly and proportionately. The only thing we can be sure of is that it will have a negative impact on businesses on both sides of the Atlantic. Trade wars always end up hurting consumers. But our 'Made in Europe' industry has strong local production capacity and is perfectly capable of meeting Europe's own needs."
Europe's printing industry is under pressure from US tariffs
In 2024, Europe imported about 135,000 tons of printing paper from the United States. At the same time, the United States exported about 812,000 tons of printing paper to Europe, mainly including coated paper and double-adhesive paper. From the perspective of trade data, the United States has a trade deficit with Europe in a number of printing paper categories this year, including 70,000 tons of uncoated mechanical paper, 113,000 tons of coated mechanical paper, 204,000 tons of double-adhesive paper and 299,000 tons of coated paper. This trade pattern could pose a challenge for printing paper producers in Europe, as the European market itself suffers from a variety of paper overcapacity problems, and also suffers from high production costs and thin profit margins.
One market commentator pointed out that due to the potential tariff impact, the amount of printing paper sold from the United States to Europe may be reduced, which means that more European-produced paper will stay in the European home market. However, in a seeming contradiction, the imposition of tariffs on Europe by the United States could lead to higher logistics costs for importing newsprint from Canada, which in turn could be a boon for local newsprint producers in Europe.
Another European market participant expressed a similar view, arguing that the tariffs imposed by the United States on Europe will directly lead to higher shipping costs from North America to Europe, which will inevitably have an impact on Canadian newsprint exports to Europe.
In addition, some market participants predict that Asian printing paper producers may increase exports to Europe. The main reason for this is that significantly higher tariffs were already imposed on South Korea, Indonesia and Thailand before the United States suspended import tariffs on April 9. At the same time, the United States maintains punitive tariffs of up to 125 percent on China. Data show that in 2024, the four Asian countries exported a total of 201,000 tons of double-adhesive paper and 307,000 tons of coated paper to the United States.
Alejandro Mata, director of European packaging and printing paper at Fastmarkets, pointed out that the impact of the previously announced tariffs on the printing paper market, and even the trade relationship between the United States and its closest trading partners - Mexico and Canada - poses a threat. He believes that the tariff policy announced this time will bring about a significant shift.
Matta further explained: "Initially, this trade disruption could have created an opportunity for European producers to expand their market share in the United States. However, things have changed. As a result of the United States Mexico-Canada Agreement (USMCA), paper trade between Canada and the United States is likely to be exempt from tariffs, while EU paper exports to the United States face import duties. As a result, not only may Europe now not enjoy the slim opportunity to increase exports to the US, but it is more likely to face a decline in exports to the US, while also dealing with an increase in imports from Asia, even though Asian exports to the US also face higher tariffs than those from the EU."
White cardboard market concerns spread
If the tariffs are implemented as planned, Europe's white cardboard market could be one of the hardest hit. Europe exports about 600,000 tons of white cardboard to the United States each year, mainly yellow core white cardboard. At the same time, Europe also imports more than 200,000 tons of other types of white cardboard from the United States. A market source pointed out: "There are no local producers of yellow core white cardboard in the United States. If they need to import from Europe, the cost will be very high given the tariff factors. In addition, it also means that there may be more of this type of white cardboard stuck in the European market."
The market source also added that the current supply of white cardboard in the European market is already quite sufficient. According to Camila Jaramillo, an economist at Fastmarkets RISI, the total capacity surplus of white cardboard in Europe is about 1 million tons per year. Although this number is down significantly from a few years ago, it is still at a high level.
Another market source said: "Either the production plants will need to bear the cost increase caused by the tariffs themselves - but I think that is unlikely to happen - or they will have to take measures to reduce capacity."
Market sources also mentioned that some producers may try to pass on the increased costs to customers in the United States. For example, on April 3rd Finlin Fabbro Americas, an American supplier of white cardstock, announced plans to raise prices by 20% across its white cardstock lines. This was in response to the US government's plan to impose a 20 per cent tariff on imports from the EU.
Meanwhile, the European White Cardboard Manufacturers Association (ECMA) said they do not expect the folding carton industry to be significantly affected. "ECMA's core focus is on the processors of folded cartons. In general, there is a limited amount of European-made folding cartons exported to the US, so the impact of tariffs on these processors will also be limited, "Mike Turner, managing director at ECMA, said in an interview with Fastmarkets.
Box board market confidence hit
Compared to cardboard, Europe's exports of carton board paper to the United States (mainly low-gram weight cow cardboard) are much smaller. Still, market sources expect that any tariff adjustments could have some negative impact.
"You might think these exports are insignificant," says one buyer active in the US market, "but we get a lot of offers from Europe in the US." European cattle cardboard producers undoubtedly see the United States as a potential export market. If exports fall because of tariffs, it will definitely hit their confidence." Another market watcher also pointed out: "If European unbleached cow cardboard mills are unable to export to the United States, they will not be so proactive in negotiating prices in the European market."
Us NBSK buyers may bear the cost of tariffs
According to Global Trade Tracker data, the EU exported about 496,000 tonnes of pulp to the US in 2024, almost all of which was bleached softwood kraft pulp (BSK). Last year, the EU imported 1.185 million tons of pulp from the United States, including 990,000 tons of BSK, most of which is fluff pulp.
Many participants in the European pulp market are currently adopting a "wait and see" approach to the tariff issue. This is mainly because they need time to assess the development of the situation, but also want to observe possible countermeasures from the EU and the progress of trade talks.
A producer of bleached softwood kraft pulp (NBSK) from the North said their next shipment to the United States is expected to arrive in May. "We are actively preparing and will pay close attention and keep abreast of the latest situation, but for now we will not make any specific adjustments as the situation in May can change a lot," the producer said.
Several European NBSK producers generally believe that their U.S. customers will ultimately bear the cost of these tariffs. They also said that the buyer side has expressed a clear attitude. "One of our biggest customers has clearly agreed that they will raise the selling price of their products in the US market," a seller revealed.
However, some market sources predict that pulp buyers in the United States may adjust their purchasing patterns over time. One of the sources noted that one possible scenario is that more Canadian pulp will flow to the U.S. market in the future, while the amount of Canadian pulp originally sold to China may be reduced. This will free up more space for European NBSK in the Chinese market.
Buyers of NBSK and bleached eucalyptus kraft pulp (BEK) in Europe have also indicated that their suppliers have not yet taken significant action. In Europe, the discussion of tariffs has so far largely focused on NBSK. However, with the US imposing a 10% tariff on BEK from South America, it is also likely to have an impact on the flow of global BEK trade.
Uncertainty hangs over the market
Most market participants believe that Trump's trade war will further hit the already weak European economy, leading to a further contraction in paper demand. Stock markets reacted sharply to the threat of potential tariffs.
On April 7, EU officials publicly said they were still open to talks with the United States, even floating the idea of zero tariffs on industrial goods. But EU Trade Commissioner Maros Sefjovic also stressed that the EU is ready to impose counter-tariffs on the United States, depending on the situation.
Speaking at a press conference after an EU Foreign Affairs Council meeting held before the EU suspended trade on April 9, Sefjovic noted: "At the moment, the trade situation with our most important trading partner, the United States, is very serious. A series of tariffs are hitting a significant proportion of EU exports. In fact, the EU exports to the US amount to 380 billion euros, accounting for 70% of the EU's total exports, and these exports are facing tariffs of 20% or 25%. When combined with existing MFN tariffs, such as the 27.5 per cent tariff on passenger cars, the effective tariff rate is even higher."
Sefjovic added: "While the EU remains open to talks with the United States and strongly prefers to resolve issues through dialogue, we will not wait indefinitely... Until we see tangible progress, we will proceed in three areas: first, to defend our interests by taking countermeasures; Second, diversifying trade through new agreements; Third, curb harmful trade diversion."
Sources in the European markets are closely watching the EU's specific moves on reciprocal tariffs in the coming weeks. The European Commission has sent a document containing a list of goods and proposed tariffs to member States on Monday evening, April 7. The measures were approved by member states on April 9, but the full list of goods is not expected to be officially published until April 14.
The first batch of countermeasures will take effect on April 15, and the second batch of measures is planned to be rolled out gradually between May 15 and December 1. Sefchovic also added that it is in the EU's interest to strengthen trade and investment links with global partners, and the way to achieve this is to accelerate the ongoing process of negotiating free trade agreements with these countries.
Britain is also discussing its response
Meanwhile, the British government is also negotiating a possible economic deal with the United States. The government is also consulting British businesses on possible retaliatory measures.
British Business and Trade Secretary Jonathan Reynolds said in a statement to parliament ahead of the April 9 trade suspension: "This is a formal step that is essential for us to keep all options open for our response." We will seek the views of UK stakeholders in the four weeks leading up to 1 May 2025 on products that may be included in the UK tariff response. If we are able to reach an economic agreement with the United States that removes the tariffs already imposed on our industry, we will suspend the consultation and cancel any measures resulting from it."
