Business decisions ‘on hold' as tariffs stress economy

La Jolla, Calif. — A U.S. plastics industry group says the on-again, off-again approach to tariffs from President Donald Trump risks putting business decisions on hold.

In an interview, Matt Seaholm, president and CEO of the Plastics Industry Association in Washington, urged the Trump administration to keep open trade between the United States, Mexico and Canada, rather than adding broad 25 percent tariffs that could disrupt supply chains.

"I think you see the market reacting to this uncertainty," Seaholm said in an on-stage interview March 11 at the Plastics News Executive Forum in La Jolla. "I think a lot of business decisions will be put on hold."

Other executives at the event echoed concerns about uncertainty from the U.S. government's back-and-forth tariff statements. Twice since he became president Jan. 20, Trump has announced high tariffs on Mexico and Canada but then backed off at the last minute.

Kevin Kelly, the CEO of plastic produce packaging firm Emerald Packaging in Union City, Calif., pointed to stock market declines and threats of recession in economic forecasts.

"I didn't think six weeks into this administration we'd be where we are," said Kelly. "Politics drives me crazy. I don't care if it's Joe Biden or Donald Trump, but if you thought that we'd be talking about a recession, looking at 3-point declines in the S&P and tariffs — yes, no, yes, no — I don't even know what tariff I'm facing right now."

The Atlanta Federal Reserve Bank's March 6 unofficial forecast for first quarter GDP estimated a 2.4 percent contraction in the U.S. economy, a sharp fall from the 2.9 percent growth it projected Jan. 31.

Tariffs on steel and aluminum imports as well higher duties on Chinese imports have gone into effect, and the U.S. president has said more could be coming.

Trump said he plans to announce another round of duties on April 2, including for reciprocal tariffs that his administration said will raise U.S. tariffs to levels that other countries assess on U.S. exports.

Kelly said in a presentation that plastics packaging companies are particularly squeezed by pressure from customers like Walmart, which has said it wants suppliers to absorb the higher costs from tariffs.

"Walmart has taken, I think, a political position," Kelly said. "They don't want to raise prices and get in trouble with the administration."

He said that's a different message than what came from Walmart six months ago, when Kelly said the retailer said tariff costs would be passed through to consumers.

Kelly argued Emerald, which has about $100 million in sales, needs to pass along higher costs.

He said the company runs lean and can't make staffing cuts, and he said he doesn't hold out hope for innovations in plastics materials that could lower costs through measures like more packaging downgauging.

"We have to pass the cost along, I don't see any alternative," he said. "We've told all our customers that's what we're going to do. We've been upfront and honest. I expect we'll lose business, but I'd rather lose the business than lose margins."

A conference presentation from the consulting firm Alvarez & Marsal also pointed to an intensifying cost squeeze, with large consumer brand companies having more pricing power.

"Resin suppliers restructure, brand owners hold pricing power and converters face rising cost pressure," the firm noted, citing analysis of 2024 financial reports from public firms. "Without decisive action, margin pressure will accelerate."

Seaholm said the three governments should keep something like the U.S.-Mexico-Canada Agreement in place, referring to the 2018 deal signed during Trump's first term to replace the 1994 North American Free Trade Agreement.

"We would prefer to see a free and open trade system in North America," Seaholm said. "I hope on a monthly basis, we're not going up to the line and pulling back. I hope we get something in place. USMCA is a good thing."

He noted administration announcements that the tariffs are aimed at stemming the flow of fentanyl and at adding U.S. manufacturing jobs, and added that the president's advisers are "really adamant" that tariffs aren't their entire strategy.

Still, he said "the plastics industry is not a siloed industry" and said U.S. companies rely on their Mexican and Canadian counterparts.

"We have a regional economy and making any sort of barriers to the trade between Mexico, Canada and the United States is generally not going to be beneficial for our industry," Seaholm said.

He said the association will study details of the administration's anticipated April 2 reciprocal tariff proposal.

The business think tank the Conference Board estimated in early March that U.S. tariffs on Mexico and Canada would lower U.S. GDP and add to inflation.

The S&P 500 closed March 13 down about 10 percent from its recent high, entering territory the markets consider a correction as media reports said investors are reacting to escalating tariffs.

National Association of Manufacturers CEO Jay Timmons on March 11 urged the Trump administration to adopt "some sort of runway" to ramp up tariffs over time to minimize impacts on manufacturing and give companies time to plan.

But the White House defended its approach to manufacturing in two March 12 statements, saying it was "remaking America into a manufacturing superpower" and listing companies moving or considering moving factories into the United States.

A second administration statement that day pointed to reports of declining inflation and better jobs reports.

"This inflation report, much like last week's jobs report, is far better than the media predicted and the so-called 'experts' expected," said White House press secretary Karoline Leavitt. "When will they learn to stop doubting President Trump?"

Still, among some executives at the Plastics News event, there was caution.

Edward Tucker, president and CEO of color concentrates maker Plasticoncentrates Inc. in Trainer, Pa., said it's possible tariffs could bring positive change and people will look back and see a brilliant strategy.

But he said at the moment it looks like unneeded disruption.

"We could wake up in the morning and go, 'Oh wow, that must have been brilliant. How come we never saw this?' " Tucker said. "But if you ask me now, I would venture to say massive unnecessary disruption."

He predicted tariffs could lead to higher inflation with supply chains adjusting to that.

But he also cautioned that based on his 40 years in the chemical industry, there's a risk that any positive impacts could be limited if goverments and industry leaders do not focus more on developing skilled technical employees and supporting industrial development.

"The tariff does not fix anything, if you don't have the strategic long vision to be able to turn it into a win for future generations," he said. "All you're doing is spitting in the wind and having it blow right back at you."

The plastics association's Seaholm said the group and its members are hoping that the frenetic pace of the early parts of the Trump administration will slow down.

"The administration said their first 100 days were going to be a whirlwind, and we're seeing that," Seaholm said. "I hope we get to a place we we're on a little bit more of an even keel."