With toilet roll and tissues swept up in an escalating international trade row, it’s not just Procter & Gamble’s Charmin that’s going to get the squeeze.
Higher prices in the wake of possible tariffs would exacerbate what is already mounting pressure on consumer product company profits from soaring costs from pulp, a main ingredient in tissues, diapers and sanitary towels, Reuters reports.
At P&G, the purveyor of Charmin toilet paper, Bounty towels, Puffs tissues and Pampers diapers, executives are weighing whether to raise prices on some products in the United States due to higher pulp prices, a person familiar with the matter tells Reuters.
Kimberly-Clark raised prices on Kleenex and other tissue products around the world by 2% in the most recent quarter, while cutting its full-year profit forecast.
Pulp, made from wood chips or recycled paper, is the only component in many tissue products and is part of most diapers and pads. The price of hardwood pulp, an ingredient in tissues and toilet paper, has surged by about 60% since late 2016, according to the Pulp and Paper Products Council, which tracks prices based on global customs data. The price of softwood pulp, used in diapers and sanitary pads, jumped by 21% during that period.
Demand from China, the world’s biggest and fastest-growing consumer of pulp, is at the heart of the global shortfall. Trade battles are further complicating matters. Canada levied tariffs on $575 million worth of U.S. tissue, toilet paper and paper towel exports earlier this year as part of its trade dispute with the United States.
Industry executives worry that tariffs from China could be next on the horizon if the United States goes through with a threat to tax a further $200 billion of Chinese imports.
Ultimately, the price shoppers pay is up to retailers, which balance prices across a range of products, and may not always reflect costs passed along by the manufacturer. Retailers may hike prices for paper towels, for instance, to avoid raising them on diapers.
