U.S. trade policies are changing faster than supply chains can handle, putting economic pressure on the food and beverage industry, experts told The Food Institute. Tariff uncertainty is forcing companies to rethink sourcing, pricing and supplier contracts as rising input costs, global trade shifts and supply chain volatility squeeze margins.
And there’s no end in sight.
The Supreme Court struck down President Trump’s claim he had the authority to impose varying tariffs on virtually every country in the world under the International Emergency Economic Powers Act. His response was to impose a 10% across-the-board tariff while administration officials sought other legal justifications. Those tariffs had a 150-day limit and expired July 24.
In their place, the administration justified double-digit tariffs on more than 60 countries, accusing them of engaging in unjustifiable, unreasonable or discriminatory trade practices and saying they had been exporting goods produced by forced labor. Nearly all U.S. imports are covered by the 10% or 12.5% levies.
The administration’s cited authority: Section 301 of the Trade Act of 1974.
“Every tariff update cascades through sourcing, pricing, product classifications, ingredient and packaging inputs, and country-of-origin compliance. Food and beverage brands also have to navigate factors like storage of perishable goods and expiration dates, which add further complexity when adapting in real time to offset tariff changes,” said Tarun Chandrasekhar, president and chief product officer at Syndigo.
And it’s not just a U.S. problem; it’s global, Chandrasekhar said.
Just days earlier, Trump ordered a 50% tariff on some Canadian goods – exempting energy and some other sectors – in the wake of wildfires that sent plumes of smoke south and east, darkening skies across much of the Midwest and East Coast. He also threatened Mexico because of the cyclospora outbreak.
Trade between the U.S. and Canada is valued at $1.3 trillion, about 12.5% of U.S. trade and making Canada the second biggest U.S. trade partner, Census Bureau figures show. Trade with Mexico is valued at $971 billion.
“The duties don’t have an expiration date,” said Bryan Riley, director of the National Taxpayers Union’s Free Trade Initiative. “They will end when the president says so, when Congress passes a law terminating them, or when the courts rule they are illegal. In the meantime…
“It’s just more uncertainty for U.S. food producers and everyone else.”
Straining Under Tariff Uncertainty
Trump also has indicated he might pull out of the U.S., Mexico, Canada Trade Agreement, which was negotiated in his first administration as a replacement for the North American Free Trade Agreement.
Kevin Slaughter, partner and lead attorney of the corporate practice group at Levenfeld Pearlstein, said tariffs are forcing many companies to invoke price-adjustment contract language for the first time to try to mitigate exposure.
“We’re now seeing a real wave of buyers and suppliers renegotiating specifically to share tariff exposure,” Slaughter said.
“Every food executive is weighing how much to absorb, how much to pass to the customer, and how much to renegotiate up and down the contract chain and getting that sequencing wrong is where you lose either the margin or the relationship. Prices also tend to be sticky. Even where tariffs have eased, consumers are still seeing elevated shelf prices, which keeps affordability squarely in the conversation.”
Tariff consultant Kyle Peacock said the latest round of tariffs “don’t create fresh shocks; they reprice existing ones.”
“Ag trade is stabilizing under negotiated volumes, but costs remain elevated and volatile. Packaging, machinery, and input tariffs keep operating costs high. Food and beverage companies face structurally higher, jittery input costs and a permanent shift toward multi‑origin sourcing. Supply chains are now built for redundancy, not efficiency, and that won’t reverse even if tariffs ease.”
The Food Institute Podcast
Trends tend to come full circle, and that could not be more true for Coast Packing, which has recently seen renewed demand for its lard and tallow products amid rising consumer interest in natural ingredients. City National Bank’s Justin D’Affronte steps in as guest host to talk with Coast Packing CEO Eric Gustafson about his company’s family legacy and the business climate in California.
