Karat Packaging Inc. announced on February 18, 2026 that it has finalized new sourcing arrangements and begun importing certain products from South America, marking a significant expansion of its global supply network.
The company also highlighted the U.S. reciprocal tariff reduction on Taiwanese goods, which has been lowered to a maximum rate of 15 percent from 20 percent without stacking. Roughly half of Karat’s global sourcing is currently from Taiwan, so the tariff cut directly reduces import costs for a large portion of its inventory.
Management said the new South American sourcing arrangements represent an important step in its global strategy to diversify product sourcing and optimize costs. By reducing reliance on China and adding suppliers in Taiwan, Malaysia, Indonesia, Vietnam, and now South America, the company aims to mitigate tariff volatility and secure supply continuity.
"Our new South American sourcing arrangements represent an important step in our global strategy to diversify our product sourcing and optimize costs," said Alan Yu, Karat’s Chief Executive Officer.
Karat’s recent financial performance underscores the urgency of these moves. In Q3 2025, the company reported net sales of $124.5 million, up 10.4 percent year‑over‑year, but gross profit fell due to elevated tariff costs. Q2 2025 net sales were $124.0 million, up 10.1 percent, while Q1 2025 net sales rose 8.4 percent to $103.6 million. Q4 2024 net sales increased 6.3 percent to $101.6 million. The company also announced a quarterly dividend of $0.45 per share, payable February 27 with a record date of February 20.
The diversification into South America, coupled with the tariff reduction, is expected to lower overall import costs and improve margin stability. The company’s strategy to spread sourcing across multiple regions positions it to better absorb future trade disruptions and supports its long‑term financial performance goals.
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