The world's largest cardboard box maker Smurfit Westrock expects US consumer spending to be squeezed significantly if 25% tariffs on Mexican goods go ahead, its CEO said after the company's shares dropped on disappointing fourth quarter earnings.
US president Donald Trump this month suspended a 25% tariff on goods from Canada and Mexico until March.
Smurfit Westrock has large production facilities in all three countries following last year's $11 billion merger (€10.6 billion) between Europe-focused Smurfit Kappa and US rival WestRock.
While Smurfit Westrock largely sells to customers within each of the 40 countries it operates in, it said many of its Mexican customers use its packaging to sell food such as fruit and vegetables into the United States.
'Significant Customer Effect'
"There will be, I would say, a very significant customer effect," Smurfit Westrock chief executive Tony Smurfit said on a call with analysts regarding the potential tariffs on Mexican goods.
"Tariffs are on the consumer so at the end of the day is the consumer going to pay 25% more for their avocados and their oranges...or whatever they buy? We'll have to wait and see because that'll be up to the American consumer and how that affects demand."
He added that Smurfit Westrock would have to "take a good look" at its large mill in Canada that exports paper to the US if a 25% tariff is applied as it would very quickly become uncompetitive.
Smurfit reported full-year core profit of $4.7 billion (€4.5 billion) and while that was in line with its expectations, earnings before interest, taxes, depreciation and amortisation of $1.17 billion (€1.13 billion) in the final three months of 2024 were below the $1.3 billion (€1.25 billion) expected by an average of six analysts with LSEG SmartEstimate.
The Irish-headquartered company said it expects to make a core profit of $1.25 billion (€1.2 billion) in the first quarter and that the year has "started well".
