Why Rising Cardboard Costs Could Become a New Risk for U.S. Grocers and Food Manufacturers

U.S. containerboard capacity cuts, higher cardboard prices and potential tariffs on Canadian imports are tightening the corrugated packaging market for grocers, CPG companies and food manufacturers.

Rising cardboard and corrugated packaging costs could become a new supply chain risk for U.S. grocers, CPG companies and food manufacturers as domestic containerboard capacity declines and potential tariffs create uncertainty around Canadian imports.

Cardboard is one of those costs that rarely gets much attention in the grocery industry until it becomes a problem. In recent conversations with industry executives, members of our team have heard growing concerns from producers and vendors about the rising cost of cardboard packaging.

Virtually every case of cereal, canned vegetables, beverages, snacks and other grocery products moving through the supply chain depends on corrugated packaging. Retailers also rely on corrugated materials for distribution, merchandising displays and e-commerce fulfillment.

The changing economics of the North American containerboard market are therefore worth watching. Paper mills producing linerboard and corrugating medium – the materials used to manufacture corrugated boxes – have been reducing capacity, pushing through price increases and operating with less excess supply.

At the same time, potential new U.S. tariffs on Canadian imports threaten to complicate one of the North American packaging industry’s most important cross-border supply relationships.

Together, domestic containerboard capacity reductions, higher producer prices and uncertainty surrounding Canadian supply could create a more expensive and less flexible corrugated packaging market for U.S. food producers and retailers.

Why Is U.S. Containerboard Supply Getting Tighter?

The story begins with a significant reduction in domestic containerboard capacity.

The U.S. containerboard industry has been taking production capacity offline following several years of weaker demand and changing industry economics. According to the American Forest & Paper Association (AF&PA), U.S. containerboard capacity declined 5.1% in 2025, while production fell 4.4% to 36.1 million tons. Despite those reductions, mills operated at a 91.9% rate for the year.

The contraction has continued into 2026. AF&PA reported that first-quarter containerboard production fell 8% from the prior year, broadly in line with capacity reductions, while mill inventories ended the quarter below their year-end 2025 level.

Fastmarkets estimates that approximately 3.9 million tons, or roughly 10% of U.S. containerboard capacity, has been permanently retired since early 2025. That 10% capacity reduction is particularly important for food manufacturers and other large users of corrugated packaging.

The industry has moved away from a period of abundant capacity toward a market in which remaining containerboard producers have greater pricing power. When mills compete aggressively for volume, lower prices often follow. When significant capacity disappears, producers have more leverage to maintain or increase prices even when overall demand is relatively modest.

That appears to be happening now.

North American producers have implemented multiple containerboard price increases in 2026, with Fastmarkets reporting that the market was facing another increase only months after an earlier round. Higher recovered-paper and transportation costs have added pressure, but reduced domestic capacity remains an important factor behind the changing market.

How Could Canadian Tariffs Affect U.S. Cardboard and Packaging Costs?

Canada is another important part of the U.S. containerboard supply chain.

The United States imports approximately 1.12 million tons of containerboard from Canada annually, representing about 83% of U.S. containerboard imports. Canadian material accounts for only about 3% of total U.S. containerboard supply, but that marginal supply becomes more important when domestic capacity is already tight.

The United States and Canada have developed an integrated paper and packaging system in which containerboard, pulp, recovered fiber and finished packaging routinely cross the border. That integration gives manufacturers additional sourcing flexibility and has helped make the North American packaging industry efficient.

Tariffs could make that flexibility more expensive.

The Trump administration announced in July that a new 50% tariff would apply to specified Canadian imports beginning Aug. 19, including products that had previously received preferential treatment under the United States-Mexico-Canada Agreement. The proposed tariff schedule could include certain Canadian containerboard and paperboard products. The precise impact remains subject to product classifications and the outcome of ongoing U.S.-Canadian negotiations.

For U.S. food manufacturers and packaging buyers, that uncertainty creates its own supply chain problem.

A U.S. producer that relies on Canadian containerboard has to consider the potential tariff cost as well as whether Canadian suppliers could change prices, redirect production or reduce shipments into the United States.

Three Forces Are Converging in the Corrugated Packaging Market

Three developments are now affecting the U.S. containerboard and corrugated packaging market simultaneously.

The first – and potentially the most significant – is permanent domestic capacity reduction. Approximately 3.9 million tons of U.S. containerboard capacity, around 10% of the total, has been removed from the market since early 2025. That alone represents a substantial structural change in domestic packaging supply.

The second is increased pricing power among remaining containerboard producers as operating rates rise and mills seek to recover higher fiber, transportation and production costs.

The third is uncertainty surrounding Canadian containerboard supply, which could make an important source of marginal U.S. capacity more expensive or less reliable.

None of those factors guarantees a major increase in the price of a finished corrugated box. Together, however, they make the packaging market less flexible.

In a tighter containerboard market, switching suppliers can become more difficult. A disruption affecting even a relatively small portion of available supply can also have a larger effect on packaging prices and lead times.

That is the risk retailers, CPG companies and food manufacturers should be watching.

Why Do Higher Cardboard Costs Matter to Grocery Retailers?

For supermarkets and grocery retailers, the concern extends beyond the price of an individual corrugated case. The larger issue is the cumulative effect of higher packaging costs throughout the food supply chain.

Nearly every manufacturer shipping packaged food and beverages to a grocery distribution center or store uses corrugated packaging. High-volume CPG companies can consume millions of cases annually. A relatively small increase in the cost of each case can therefore become a meaningful manufacturing and distribution expense.

Some of those higher packaging costs could ultimately become part of the prices retailers pay suppliers.

Retailers with substantial private-label operations may have additional exposure because packaging specifications, sourcing decisions and manufacturing arrangements can fall more directly within their procurement and supply chain operations.

Supply availability could ultimately matter even more than price.

A manufacturer can budget for a higher corrugated box cost. It is more difficult to manage a situation in which a preferred box specification, containerboard grade or production slot is unavailable when needed.

Packaging shortages or longer lead times could force food manufacturers to change suppliers, alter case specifications or redesign packaging. Each option carries additional costs and operational considerations.

How Can Food Manufacturers Respond to Higher Corrugated Packaging Costs?

Food manufacturers have several ways to reduce their exposure to rising cardboard and containerboard costs.

Potential responses include using lighter-weight packaging, changing corrugated box designs, improving pallet utilization, diversifying suppliers and renegotiating packaging contracts. Manufacturers may also review case sizes and board specifications to determine whether they are using more material than necessary.

Those measures can reduce packaging costs, but they cannot eliminate the underlying constraint created by reduced containerboard capacity.

If large numbers of manufacturers pursue similar packaging changes simultaneously, demand could also shift between different board grades and specifications, potentially creating additional pressure in particular parts of the corrugated market.

For procurement teams, the issue therefore extends beyond negotiating the lowest price. Supplier diversification, available production capacity, lead times and alternative packaging specifications could become increasingly important considerations.

Could Cardboard Costs Raise Grocery Prices?

Higher cardboard costs alone are unlikely to become a major driver of U.S. food inflation. Packaging, however, is one of many input costs incorporated into the manufacturing and distribution of grocery products.

If corrugated packaging prices continue rising, food and beverage manufacturers could attempt to recover some of those expenses through higher prices or other changes in their relationships with retailers.

The effect of any individual box may be small. Across millions of cases moving through manufacturing plants, warehouses, distribution centers and stores, the cumulative expense can become significant.

That makes containerboard prices and corrugated packaging availability relevant indicators for grocery retailers monitoring supplier costs.

The Bigger Cardboard Risk Is Supply Security

The larger issue facing the grocery and food manufacturing industries is supply security.

The North American packaging system has historically benefited from integration. Canadian mills supply U.S. customers, U.S. mills supply Canadian customers, and fiber, containerboard and finished packaging move across the border.

That system works efficiently when trade flows are predictable and the industry maintains sufficient excess production capacity.

The situation becomes more complicated when containerboard capacity is being permanently removed at the same time that tariffs threaten to disrupt cross-border economics.

For retailers and food manufacturers, the central question is whether the North American corrugated packaging industry has enough flexibility to absorb another disruption without producing higher costs, reduced packaging availability or longer lead times.

The answer will depend on containerboard operating rates, additional mill closures or capacity reductions, Canadian trade policy and the ability of manufacturers to adjust packaging specifications and suppliers.

For a grocery industry already managing labor, transportation, commodity and tariff pressures, cardboard may not become the next major source of food inflation. A tighter corrugated packaging supply chain could nonetheless become another cost and operational risk that retailers and food manufacturers need to monitor.