Tariff Reality Check: What Actually Happened vs. Industry

When recent tariffs were implemented, industry experts predicted widespread chaos, massive cost increases, and supply chain disruptions. Now that we’ve had time to assess the actual impact, we wanted to share our experience compared to these initial forecasts.

Navigating the Perfect Storm of Timing and Uncertainty

With August 1st approaching, when final tariff rates are expected to be decided, it’s important to recognize that for many businesses, custom packaging services represent just one piece of the broader tariff equation. Many cross-border tariffs remain unclear, and the industry must continue to prepare for change while striving to keep costs down.

The timing of these tariff announcements, coming after most holiday season orders have been completed, creates an additional layer of complexity as businesses navigate pricing and planning decisions for the remainder of the year.

For past orders, we held to our commitments strongly, we acknowledge there were one or two situations where we could not absorb the full tariff impact and had to pass on a small percentage. After August 1st, we will continue managing our network to keep prices low and prevent surprises, with our team working daily to understand potential impacts.

Why This Tariff Wave Was Different

Tariffs are a standard component of international trade, they’re part of the normal business landscape. What distinguished this situation was the scope and uncertainty involved. Unlike typical targeted tariffs, these affected multiple countries simultaneously with significant rate increases that created ripple effects throughout the supply chain. The uncertainty around whether these rates would remain stable or face further adjustments created additional planning challenges for businesses.

Some companies viewed this as an opportunity to increase prices and margins beyond what tariff costs actually justified. Simultaneously, many U.S. buyers began exploring domestic production alternatives as a strategic response. This varied market reaction likely contributed to the more dramatic predictions circulating at the time.

The Domestic Production Reality

While we all wish domestic production could quickly answer the call of higher overseas tariffs, the reality is more complex. Many raw materials still originate overseas, and certain products simply cannot be manufactured domestically due to resource or capability constraints. In other cases, domestic options may lack the experience to meet established quality standards or the production capacity needed to serve larger markets effectively.

That said, we continue to work actively with our domestic network to identify opportunities that support the growth of viable domestic options for our customers. It’s a gradual process that requires realistic expectations about timelines and capabilities, but one that offers long-term strategic value.

Predictions vs. Reality: Our Front-Line Experience

Packaging Product Cost Increases: Industry forecasts warned of 40% cost increases across the board. In our experience, we encountered mostly isolated cases, many with single-digit increases, and overall, significantly less than the widespread impact that was anticipated.

Raw Material Disruption: Predictions centered on substantial cost increases from material shortages and price volatility. We have not experienced material impacts in this area.

Minimum Order Quantity Changes: There was considerable discussion about suppliers dramatically increasing MOQs to offset costs. We have not encountered any MOQ adjustments from our supplier partners.

Hidden Operational Costs: While customs code reclassification did require internal adjustments, it did not create the operational disruptions that were predicted. We managed the transition without significant interruptions to our operations.

Supply Chain Chaos: Despite warnings about delays and disruptions, our operations have remained stable. Our established supplier relationships enabled us to maintain normal service levels.

Inventory Stockpiling: The predicted rush to stockpile inventory and tie up capital did not prove necessary in our case, as we maintained effective demand planning through close supplier collaboration.

What Separates Survivors from Strugglers

Companies that navigated this period most successfully appeared to be those with established supplier relationships and operational flexibility. Organizations that experienced greater challenges often lacked the agility to adapt quickly or had not developed strong partnership networks.

What we’ve seen increasingly over the years is that the success of agile network businesses flies in the face of traditional models that rely on centralized economies of scale. While centralized approaches may offer cost advantages in stable conditions, they often struggle to adapt quickly when market conditions shift unexpectedly.

While tariffs can certainly create significant business challenges—particularly for companies without flexible operations or experienced supplier networks—the actual impact varied considerably from initial predictions.

Building Resilience for Whatever Comes Next

The trade landscape continues to evolve, with ongoing changes in tariffs, regulations, and supply chain dynamics. Companies with industry experience have typically weathered various disruptions over the years—COVID-19 impacts, anti-dumping legislation, shipping strikes, and now tariffs. Each situation tests organizational adaptability and supplier relationship strength.

Maintaining operational flexibility and strong supplier partnerships appears to be key for managing not just tariff-related challenges, but any future disruptions. Companies that have successfully navigated previous industry changes tend to be better positioned for future challenges, having developed both the systems and relationships that enable rapid adaptation.

We’re interested in hearing about your experience with these changes. Have you seen similar results, or has your situation been different? Sharing these real-world experiences helps provide a clearer picture of how industry changes actually impact day-to-day operations.