Tariff policy is changing quickly, forcing F&B companies to reassess costs, sourcing, and financial planning.
During a recent FI webinar entitled “Food Industry Tariffs: Risks, Refunds, and What’s Next,” experts from CBIZ, Nelson Mullins, and BMO painted a picture of a trade environment that’s been redefined by a series of factors including:
- Legal challenges
- Refund claims
- Shifting sourcing strategies
- Investor scrutiny
- Financing pressures
More than anything, the discussion made it crystal clear that tariffs have moved beyond customs compliance.
Refunds, With a Side of Scrutiny
When importers seek refunds on tariffs that were ruled unlawful, the process can return money that was already paid; however, it can also expose prior import activity to review.
Buzz Burwell of Nelson Mullins noted that filing through the refund portal allows customs officials to review five years of import history.
The expert advised food companies to confirm country-of-origin designations, tariff classifications, valuations, and entry types before submitting a claim – because any errors carry the potential to not only delay processing but also expose filers to audits and civil or criminal liability.
Once a claim is accepted for processing, companies can expect a roughly 60-day to 90-day turnaround after paid duties are reconciled against the refund request.
Some complex entry types remain outside the first phase of processing, while litigation over other claims continues.
And the tax consequences can be equally complicated.
Mark Baran of CBIZ recommended for F&B companies to look at how the original tariff expense was treated on prior tax returns prior to determining how to account for a refund.
“It’s not a simple windfall,” he said.
Treatment can also vary depending on whether the tariff was deducted as an expense, capitalized into inventory or an asset, or passed downstream.
Timing also matters – particularly for accrual-basis businesses, as Baran noted that a company could face a tax liability before its refund even arrives.
This uncertainty is also influencing investment decisions.
Todd Giles of BMO said that investors are now placing greater emphasis on “earnings resiliency, pricing power, and supply chain flexibility.”
And businesses with heavy import exposure or concentrated sourcing are facing even more scrutiny, unlike those that are able to diversify suppliers or pass through costs, which are being viewed more favorably.
Some companies are also postponing large capital projects while prioritizing automation, productivity, supply chain resilience, and geographic diversification.
Demonstrate the Downside
In addition, the panel of experts repeatedly emphasized the importance of adequate scenario planning.
Lou Biscotti of CBIZ said that inventories have increased for critical inputs, which has in turn placed additional pressure on cash flow.
He also argued that traditional landed-cost calculations are no longer sufficient.
“It used to be just landed cost, which is purchase price, tariffs, and freight,” Biscotti said. “But now it’s landed cost plus lead time plus disruption risk.”
Companies should model tariff increases, supplier changes, ingredient substitutions, and contract terms as conditions evolve, and the presenters also recommended that they regularly review sourcing options, first-sale-rule eligibility, hedging strategies, credit capacity, and liquidity cushions.
Chris Cushing of Nelson Mullins added that businesses should expect this uncertainty to persist for the foreseeable future, as several tariff-related court cases remain unresolved.
The panel also highlighted Section 301 investigations and country-specific measures that could affect food, beverages, and packaging inputs.
So, what are some practical ways that food companies can respond to these challenges?
According to the experts, it all goes back to coordination.
More specifically, they advised business leaders to:
- Align their finance, tax, legal, supply chain, customs, and banking teams.
- Update their forecasts in response to evolving conditions.
- Identify where their businesses have room to adjust or improve.
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