What Karat Packaging Inc. told the SEC could break it.

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.”

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.”

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.”