How Tariffs and EPR Rules Are Separating Packaging Winners and Losers

The collision of U.S. trade policies and UK environmental regulations has created a high-stakes sieve for packaging-intensive industries. Companies that fail to pivot toward sustainable materials risk soaring costs and regulatory penalties, while innovators in recyclable and bio-based packaging stand to dominate. This is a moment to short the laggards and back the pioneers—before the storm hits full force.

The Perfect Storm: Trump-Era Tariffs vs. UK EPR Rules

The U.S. tariffs on aluminum, steel, and energy resources (effective March 2025) have forced industries to rely more on plastic, a cheaper alternative. Beverage giants like Coca-Cola, for instance, switched from aluminum cans to plastic bottles to avoid 25% metal tariffs—a move now backfiring.

Meanwhile, the UK’s Extended Producer Responsibility (EPR) rules, which took effect in 2025, charge firms for plastic waste. Large producers face modulated fees based on packaging recyclability, with non-compliance fines reaching hundreds of thousands of pounds.

The result? A $20B+ annual cost shift from governments to businesses, creating a stark divide between winners and losers.

Sectors on the Brink: Beverages, Retail, and Consumer Goods

1. Beverages:
2. Risk: Aluminum tariffs forced a shift to plastic, but UK EPR now penalizes single-use plastics. Coca-Cola’s plastic-heavy strategy could cost it £130 million annually in compliance fees.

3. Opportunity: Firms like Keurig Dr Pepper, investing in aluminum and biodegradable bottles, are positioned to outperform.

4. Retail:

5. Risk: EPR’s “household packaging” rules target retailers using non-recyclable plastics. Walmart’s reliance on low-cost plastic packaging may face £25M+ in fines by 2026.

6. Opportunity: Aldi’s early adoption of recycled HDPE containers and partnerships with bio-plastic innovators like Danimer Scientific (NYSE: DNMR) offers a compliance edge.

7. Consumer Goods:

8. Risk: Plastic tariffs and EPR fees are squeezing margins for household brands. Procter & Gamble’s (NYSE: PG) plastic-heavy product lines face 15% cost increases.
9. Opportunity: Unilever’s (NYSE: UL) carbon-neutral packaging initiative, using plant-based polymers, positions it as a leader in EPR compliance.

Actionable Investment Themes

1. Short the Laggards

Firms clinging to non-compliant materials face double whammy risks:
- EPR fees: For every tonne of non-recyclable plastic, companies pay £200–£500 in modulated fees.
- Regulatory penalties: The UK’s Environment Agency has already issued £2.1M in fines to non-compliant firms in 2025.

Target to Short:
- Coca-Cola (KO): Overexposed to plastic, with no clear EPR mitigation strategy.
- Walmart (WMT): High EPR liability from its massive retail footprint.

2. Back the Innovators

Invest in companies pioneering recyclable materials and closed-loop systems:
- Danimer Scientific (DNMR): Manufacturer of biodegradable PHA plastics, used by Walmart and Target.
- TerraCycle (NASDAQ: TCYC): Leader in recycling hard-to-process plastics, now expanding into EPR-compliant packaging.
- Ball Corporation (NYSE: BLL): Aluminum can leader benefiting from U.S. tariff exemptions and UK EPR’s preference for metal.

The Bottom Line: Act Now or Be Left Behind

The convergence of tariffs and EPR rules is no longer theoretical—it’s reshaping supply chains and bottom lines. Firms that delay pivoting to sustainable materials will face shrinking margins, regulatory penalties, and loss of market share.

For investors, this is a once-in-a-decade opportunity:
- Short the dinosaurs: Target companies with high plastic reliance and no clear EPR plan.
- Buy the pioneers: Lock in gains with innovators in recyclable materials and closed-loop systems.

The sieve is already in motion. The question is: Are you on the winning side?

Final Note: Time is running out. The UK’s EPR fees for 2024 data are due by October 2025—companies unable to adapt will face existential pressure by year-end. Act swiftly.