More ‘shrinkage’? How can Trump Tariff Recorn through Food Industry

As a threat of another trade war on the food and drink sector, experts say that there is a possibility of increasing the cost of industry or by quietly cutting costs through the size or improvement of ingredients.

President Donald Trump is using tariffs to reopen the global trade policy, proposing or implementing a hurry of duties on countries including his North American colleagues. Trump ordered on Monday 25% tariff on steel and aluminum imports From all countries, while 25% of duties on imports from Canada and Mexico are ready to be implemented on 1 March.

Food is one of the industries that are the weakest for the effects of tariffs because the poor nature of the products makes it difficult to prepare for companies. Although most of the food consumed in the US is also produced here, companies are dependent on other countries for major ingredients or packaging materials.

Canada is a major supplier of oats and has been a significant partner in rapid cocoa processing, Tome Madreki said, which oversees the issues of supply chain in the Consumer Brands Association, which advocates from some of the largest food companies . Mexico, meanwhile, is a major player in the beverage industry and one of the eldest Suppliers of beer, flavored water and liqueur,

Beyond the material, other aspects of production such as tariff packaging can also affect. Canada is a supplier of metal and paper products and a tariff on steel and aluminum will increase prices for canned foods or beverages.

Tight margin in the CPG area means that food companies do not have the ability to catch and absorb the tariff, “Madreki said. Although the tariff is unlikely to respond to the tariff by increasing prices in many businesses, especially grocery inflation remains a frequent issue among consumers.

“They are going to be very careful about the price hike right now,” said Kent Esselor, senior director of the industry solution for O9 solutions. PepsiCo and Snack Maker Mondles International adapted their supply chains. “The consumer said,” We are not taking it. ” ,

Consequently, Esselor stated that CPG companies will probably try to cut costs in other ways. Food manufacturers will look for alternative ingredients, re -design packaging or reduce the size or volume of an item – a practice known as “shrinkflation”.

Some food and drink giants have already announced potential product changes as tariff hazards. For example, in response to Trump’s 25% tariff on steel and aluminum, Coca-Cola said it would possibly sell its soda more in plastic bottles.

“The winners are going to be the most accurate and most targeted on it, without renunciation of volume and market share,” Essinger said.

However, all food companies do not have the flexibility to adjust certain aspects of their supply chains to keep the cost low, especially in the import-bar fresh fruits and vegetable fields. Fresh fruits and businesses in the vegetable field can greatly reduce to prepare or feed the tariffs, meaning those high costs will be likely Gave consumers.

Mexico made half In the case of value in 2023, US fresh fruit imports and 69% of fresh vegetable imports, Statistics from agriculture departmentIt is unlikely that the production of these fruits or vegetables can be offset by American farms – especially since products such as avocado require specific climate.

While other industries are stocking parts or supplies in anticipation of any other business war, it is not as easy in the food sector.

“It’s not that you ‘oh, okay, okay, let’s bring all the bananas now and set them on one side,” Madreki said. “Because bananas are not going to last very long.”