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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