US tariffs on Canadian plastics hit packaging converters' margins

Rabobank estimates that about 20% of the roughly USD 15bn US-Canada plastics trade is exposed to the 50% US tariffs imposed on USD 20bn of Canadian goods since July, with polyethylene bags, closures and tableware among items listed at the 50% rate. Confusion over tariff-code classification and the war involving Iran, which has disrupted polyolefin supply and pricing since it began, are compounding margin pressure on plastic packaging converters.

Why this mattersOverlapping US-Canada tariffs and Iran-driven feedstock volatility make fixed-price contracts riskier for plastic converters and squeeze margins even as resin producers post higher profits.

• Canada's reciprocal tariffs order lists polyethylene bags, stoppers, lids, caps, closures and tableware at a 50% rate, and molds for plastic, metal and rubber manufacturing at 15%.
• Rabobank estimates about 20% of the approximately USD 15bn US-Canada plastics trade is exposed to the 50% US tariffs applied to USD 20bn of Canadian goods since July.
• Section 338 duties stack on top of base duties and apply even to goods otherwise covered by USMCA free-trade terms.
• The war involving Iran reached six months in late August 2026, with disruption and price spikes affecting polyolefins resuming after fighting restarted in July.
• North American PE and PP producers use lower-cost ethane versus naphtha used in Asia and Europe, and are increasingly exporting amid global demand for cheaper feedstock, raising costs for some US converters.
• Cascades CEO Hugues Simon said on an August 2026 earnings call that different products of the same fibre grade are treated unequally under US-Canada tariffs.

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