Iran Conflict and Tariffs Push Packaging Costs Higher
Metal packaging manufacturers are facing a complex pricing environment in 2026. Tariffs on aluminum and steel remain in place, U.S. aluminum premiums have reached historic highs, and geopolitical tensions are adding new uncertainty to global supply chains.
For companies that rely on aluminum and tinplate steel—including beverage can producers and closures suppliers—these developments are influencing procurement decisions, pricing strategies and long-term sourcing plans.
Below is a closer look at the factors currently shaping metal packaging costs.
Tariffs on Aluminum and Tinplate Steel Continue to Affect Packaging Costs
Despite recent legal challenges to parts of U.S. tariff policy, the tariffs most relevant to the metal packaging industry remain unchanged.
On February 20, the U.S. Supreme Court struck down certain tariffs implemented under the International Emergency Economic Powers Act. However, the ruling did not affect the Section 232 tariffs applied to aluminum and steel, which continue to influence the price of key packaging inputs. There had been speculation earlier in 2026 that tariffs on aluminum and tinplate steel might be reduced, but the administration denied those reports and has not announced any rollback.
As a result, metal packaging manufacturers are still operating within the same tariff framework that has shaped the industry in recent years.
The Midwest Premium for Aluminum Reaches Record Levels
One of the most important indicators for aluminum buyers in the United States is the Midwest Premium, which reflects the additional price U.S. buyers pay above the global aluminum benchmark.
In late January 2026, the Midwest Premium surpassed $1 per pound for the first time, marking a historic milestone and highlighting the widening gap between U.S. aluminum costs and international markets.
For industries that rely heavily on aluminum—including beverage cans and closures—this premium significantly increases the total cost of materials.
Research from the University of Cincinnati found that canned foods experienced some of the largest grocery price increases toward the end of 2025, illustrating how rising packaging input costs can ripple through the broader food supply chain.
Higher Aluminum Costs Are Moving Through the Supply Chain
Executives across the packaging sector have acknowledged these cost pressures during recent earnings discussions. According to executives at major can manufacturers, aluminum prices have increased significantly in recent months. Companies are also expecting direct tariff-related cost impacts in 2026. Many of these increases have already been passed through the supply chain, affecting food and beverage companies and ultimately consumers.
Scott Breen, president of the Can Manufacturers Institute, explained that additional price increases may still be ahead:
“We expect greater price increases in 2026 than we saw last year,” he said, citing the “sky-high” Midwest Premium.
Tinplate Steel Imports Remain Critical for U.S. Can Production
Another structural challenge for the metal packaging industry is the availability of tinplate steel. Domestic supply of this material is limited. According to industry data, U.S. companies import nearly 80% of the tinplate steel used in can manufacturing. This dependence on imported material means that tariffs can have an outsized impact on costs for downstream manufacturers. Industry leaders have been advocating for policies that maintain access to competitively priced materials.
As Breen explained:
“We’re talking with the Trump administration, explaining this reality for our industry, because we’re domestic manufacturers too, and we support thousands of jobs across this country as well. So we don’t want our industry to be threatened.”
He added:
“We need to make sure that we have the tinplate steel we need at a competitive price to make the cans.”
Trade Policy and the USMCA Review Could Affect Metal Supply Chains
Trade policy may also influence the future cost structure of metal packaging. The U.S. Trade Representative’s 2026 trade agenda reaffirmed the administration’s “America First” trade approach, including plans to review the United States–Mexico–Canada Agreement (USMCA).
The agreement currently provides tariff exemptions for many products traded between the three countries. Any changes to the framework could affect cross-border metal supply chains.
For companies sourcing aluminum or steel from North America, monitoring developments related to USMCA will remain important.
Geopolitical Risk: The Iran Conflict and Aluminum Supply
Global geopolitical developments are also contributing to market uncertainty. The conflict involving Iran and the broader Middle East has raised concerns about potential disruptions to aluminum supply chains.
According to the Aluminum Association:
“In 2025, the Middle East accounted for roughly 21% of unwrought aluminum imports and 13% of wrought aluminum imports.”
Because the region represents a meaningful portion of global aluminum trade, disruptions could increase volatility in supply availability and pricing. The Aluminum Association stated it is closely monitoring the situation with member companies due to potential supply chain implications.
What Beverage and Packaging Companies Should Watch in 2026
For companies across the beverage and packaging supply chain, several key variables will influence costs this year:
- U.S. tariffs on aluminum and steel
- The movement of the Midwest Premium
- Availability of imported tinplate steel
- Trade policy developments related to USMCA
- Geopolitical risks affecting aluminum supply
Despite rising costs, metal packaging remains widely used due to its durability, recyclability and protection of product quality. However, continued tariff pressure and global uncertainty may continue shaping procurement strategies throughout 2026.
About Capsules and Closures
Capsules & Closures supports beverage and packaging supply chains with aluminum cans, can ends, caps, closures, and related components designed for reliability at scale. For questions on sourcing, pricing, or market conditions, contact Capsules & Closures directly.
