"Even the Lifeline Might Snap"... Trump’s 'Tariff Push and Pull' Has the Textile Industry 'Shaking'

As U.S. President Donald Trump's 'tariff tug-of-war' continues, anxiety is growing in our paper industry. The industry is actively targeting overseas markets to overcome worsening business conditions caused by sluggish domestic demand, but the tariff war triggered by the Trump administration could severely deteriorate the marketability of the United States, a key export country.

Pulp, the raw material for paper

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According to the related industry on the 10th, domestic paper companies exporting to the U.S. are struggling to devise countermeasures as uncertainty in the U.S. market due to tariff issues increases. Company A, which relies on overseas exports for about 50% of its total sales, has decided to reduce its export volume to the U.S. to diversify risk and is proceeding with specific practical measures. A representative of Company A expressed concern, saying, "If the situation unfolds as President Trump has declared, the risks associated with exports to the U.S. will be difficult to estimate," adding, "It could become a situation where transactions lead to losses."

When President Trump announced that he would postpone the application of reciprocal tariffs on countries other than China for 90 days and impose only a 10% basic tariff, some reacted with relief, saying "at least one hurdle has been overcome." However, tension remains high due to President Trump's unpredictable tendencies.

If the Trump administration's initially announced country-specific reciprocal tariff plan is implemented, domestic paper companies will be at a much greater disadvantage compared to competitors in the U.S. market. The main paper importers to the U.S. are Sweden and Canada, which together account for 80% of the total U.S. imports. If South Korea (reciprocal tariff 25%) faces higher tariffs than the European Union (reciprocal tariff 20%) and Canada (tariff exemption), the price competitiveness of domestic paper companies could significantly decline.

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After a prolonged recession and decreased paper demand following COVID-19, the domestic paper industry experienced a 'brief' improvement in performance last year. This was due to stabilized maritime freight rates, an increase in exchange rates, and rising U.S. export demand. According to the Korea Paper Association, last year's export volume of printing paper was 977,538 tons, about 4% higher than the previous year (943,847 tons).

There is also a possibility that some cheap paper produced in China, which is most exposed to the tariff war, could enter the domestic market and cause some disruption. If this happens, our paper industry will be forced to face structural recession causing domestic demand slump, tariff risks, and low-price offensives from Chinese companies simultaneously. Like other industries, the paper industry is hoping that the Trump administration will step back after achieving certain objectives, considering the shocks such as domestic price increases caused by the tariff war.

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