Amid the U.S. tariff war, Canadian and Mexican paper mills may turn to India, causing price fluctuations

Amid the U.S. tariff war, Canadian and Mexican paper mills may turn to India, causing price fluctuations

- Aggressive export strategies by Canada and Mexico could result in lower-priced paper imports into India
- Indian paper manufacturers might benefit if global prices drop due to excess supply.

-The Indian government has already initiated an anti-dumping investigation against Virgin Multilayer Packing Board from China and Chile, with a verdict expected post-June 2025.

The Pulp and Paper Times spoke with Mr. Hiren Karia, President of The Paper Traders Association of Mumbai and Partner at Jay Raj Fine Paper Company, Mumbai, about the ripple effect on the Indian paper industry amid the U.S. trade war with Canada and Mexico. We analyze the potential impact on the Indian paper trade in the near future if the trade war continues. Here are his insights:

The Pulp and Paper Times

The recent imposition of a 25% tariff by the United States on imports from Canada and Mexico marks a significant shift in global trade dynamics. This move is expected to create a ripple effect across the global paper industry, influencing supply chains, pricing trends, and market strategies worldwide. India, as a key player in the industry, will likely experience both challenges and opportunities arising from these changes. Below are key insights into the potential impacts.

Impact on the Industry

•The tariff is likely to result in excess supply from Canada and Mexico as their exports to the U.S. decline. This may prompt these countries to seek alternative markets, increasing competition in regions such as Southeast Asia and India.

• Prices of imported paper in the U.S. may rise, which could benefit domestic manufacturers but may also influence global pricing trends.

Benefits or Losses for Indian Paper Manufacturers

• Indian paper manufacturers might benefit if global prices drop due to excess supply. However, aggressive export strategies by Canada and Mexico could lead to lower-priced imports in India, pressuring domestic mills, particularly those producing similar grades of paper.

• Conversely, if India emerges as a key alternative market, domestic traders and converters may gain access to competitively priced raw materials and finished products.

Shift in Export Markets

•Paper mills in Canada, China, and Mexico will likely explore alternative markets, including India and Southeast Asia. This influx of imports may cause price fluctuations in the Indian market, necessitating strategic adaptations by domestic mills.

Additional Comments

• Indian manufacturers must be cautious of the impact of lower-priced imports and ensure that domestic demand remains robust to sustain pricing.

• Policy interventions such as anti-dumping duties or tariff adjustments may be introduced if a surge in imports threatens local production. The Indian government has already initiated an anti-dumping investigation against Virgin Multilayer Packing Board from China and Chile, with a verdict expected post-June 2025.

• The government is also planning to implement a Quality Control Order (QCO) under the Bureau of Indian Standards (BIS) for Writing & Printing, Coated Paper, and Boards.

• These policy measures could help safeguard domestic paper mills from excessive imports.

U.S. Tariffs on India (Proposed from April 2, 2025)
•    The proposed U.S. tariffs on Indian imports could have a dual impact:
     - India imports a significant volume of waste paper from the U.S. Higher costs may increase raw material expenses for Indian mills, thereby elevating production costs.
   - If Indian finished paper exports to the U.S. become more expensive due to tariffs, manufacturers might explore alternative export markets, adjusting their strategies accordingly.

Conclusion

The situation remains highly dynamic, and industry stakeholders must closely monitor global trade developments. Strategic planning and potential policy interventions will play a crucial role in mitigating the risks and leveraging new opportunities arising from these tariff changes.

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