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As the threat of other trade wars occurs in the food and beverage sector, experts say that the industry may respond by quietly reducing the cost by raising the price or reconstructing the small size or materials.
President Donald Trump uses tariffs to reconstruct global trade policies and propose or enact duty to countries, including North American allies. On Monday, Trump ordered 25%of tariffs on all countries’ imports and aluminum imports, and 25%of tariffs on imports between Canada and Mexico will take effect on March 1.
Foods are one of the most vulnerable industries on the impact of tariffs because it becomes more difficult for the company to prepare due to the easy characteristics of the product. The majority of foods consumed in the United States are produced here, but the company relies on major ingredients and packaging materials.
Canada is a major supplier of oats and is becoming more and more important in cocoa processing, Tom Madreci, who supervises the supply network of the Consumer Brands Association. Mexico, on the other hand, is a major player in the beverage industry and is one of the largest suppliers of beer, fragrant water and liqueur.
In addition to ingredients, the fare can also affect other aspects of production, such as packaging. Canada is a supplier of metal and paper products, and tariffs on steel and aluminum will increase the price of canned foods or drinks.
The hard margin of the CPG sector says that a food company has no ability to capture and absorb tariffs. However, many companies will not respond immediately to tariffs by raising prices. In particular, groceries inflation remains for consumers.
Kent Esslinger, the chief executive officer of the O9 Solution, said, “You will be very careful about the current price increase. Pepsico and snack maker Mondelēz International optimize the supply chain. “Consumers say, ‘We will not continue to accept this.’
As a result, Esslinger said the CPG company would try to reduce costs in different ways. Food manufacturers find alternative ingredients and re -design packaging, or reduce the size or amount of items known as “contraction”.
Some food and beverage giants have already announced potential products as the tariff threats approached. Coca -Cola, for example, said it would sell more beverages to plastic bottles, for example, in response to 25%of tariffs on Trump’s steel and aluminum.
Essingler said, “Winners will be the most accurate and most targeted for this problem,” said Essingler.
However, not all food companies can maintain the cost of flexibility, especially fresh fruits and vegetables that can reduce costs by adjusting certain aspects of the supply chain. Companies in fresh fruits and vegetable sectors can hardly help to prepare or respond to tariffs. It has been delivered to consumers.
Mexico formed half According to data from the Ministry of Agriculture, 69%of fresh fruits and fresh vegetable income in 2023, according to data from the agricultural department. The production of this fruit or vegetables is unlikely to be offset by US farms. This is especially because products such as avocados require certain climates.
Other industries have reserved parts and supplies in anticipation of other trade wars, but are not easy in the food sector.
Madreci said, “It’s as if it’s as if it’s as if it’s as if you take all bananas and see it separately.”
Food and farm groups have forced Trump to exempt certain ingredients that cannot be grown in the United States from tariffs. MADRECKI mentioned the Consumer Brands Association. The administration is calling for a “strategic” approach to achieve a designated scientific goal without raising consumer prices in the process.
“There is a lot of concerns about cost rising and groceries in this country,” Madreci said. “And what the administration should keep in mind is to evaluate it. Where does it make sense to impose tariffs?”
