KRT · CIK 1758021
What Karat Packaging Inc. told the SEC could break it.
Karat Packaging's risks trace back to its Asian supply chain. Its product sourcing is concentrated in Asia — about 50% from Taiwan, 15% from China and 17% from Malaysia and Vietnam — so a disruption there, particularly in Taiwan, would materially hit product availability and cost. That import reliance runs straight into trade policy: higher U.S. duties and tariffs nearly doubled its duty costs from $14.7 million in 2024 to $29.3 million in 2025, cutting gross margin by roughly 210 basis points. Because it pays certain international vendors in their local currencies — notably the New Taiwan Dollar — exchange-rate moves against the U.S. dollar are a further cost exposure.
3 self-disclosed vulnerabilities, pulled from its own filings, each in the company’s words, with the source. This is the risk register almost nobody reads.
In its own words
What could break it.
Geographic concentration
- Global sourcing concentrated in Taiwan (~50%) and Asiahigh
Product sourcing is concentrated in Asia — Taiwan ~50% of global sourcing, China ~15% (down from 22%), and Malaysia/Vietnam ~17% — so disruption to Asian (especially Taiwan) supply would materially affect product availability and cost.
“We reduced purchases from China from approximately 22% of global sourcing in 2024 to approximately 15% in 2025, maintained purchases from Taiwan at approximately 50% of our global sourcing, and diversified sourcing to countries with more favorable trade conditions, including Malaysia and Vietnam, which in aggregate accounted for approximately 17% of our global sourcing in 2025 compared to 9% in 2024.”
Regulatory & policy
- Import duties and tariffs (China and broader)high
Higher U.S. duties and tariffs nearly doubled Karat's duty costs from $14.7M (2024) to $29.3M (2025) and cut gross margin ~210bps, with tariffs on Chinese and other imports continuing to pressure costs.
“the year-over-year increase in cost of goods sold was primarily driven by an increase in ocean freight and duty costs of $20.6 million, resulting from higher duties and tariffs, which nearly doubled from $14.7 million for the year ended December 31, 2024 to $29.3 million for the year ended December 31, 2025.”
Currency (FX)
- New Taiwan Dollar / foreign-currency exposure on vendor paymentsmedium
Karat pays certain international vendors in local currencies, particularly the New Taiwan Dollar; exchange-rate movements against the U.S. dollar could increase its costs.
“Our third-party vendors are located in international markets, and we make payment to certain of these vendors in their local currencies, including New Taiwan Dollars.”
SEC filing →As of 2026
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