Tariffs and Trade Policy Pose Ongoing Risks

The ripple effects of tariffs and shifting trade policy are being felt throughout the food industry. At IFT FIRST: Annual Event and Expo, held July 14–16 in Chicago, a Solutions Showcase session titled “Tariffs, Trade Policy, and the Real Cost to the Food System” featured Ron Tanner, CEO of Tanner Food Group and former Specialty Food Association executive, and Kelly Beaton, chief content officer of The Food Institute. Together they examined how tariffs are raising costs, reshaping supply chains, and altering consumer behavior.

Imports Under Pressure

Tanner emphasized the scope of U.S. reliance on imports. U.S. imports total about $4 trillion annually, with food representing about 5% of that. In 2024, roughly $205 billion of food was imported, accounting for about 15% of U.S. food consumption. Canada, Indonesia, and the Netherlands are among the top suppliers, providing everything from wheat and pulses to cocoa, sugar, and spices.

But tariffs are adding volatility. “Canada was 25% at the end of June, it’s now 35% and it might have changed to 45% this morning,” Tanner said, noting similar increases from Mexico, the European Union, and others.

Manufacturer Response

Beaton said the impact is more than financial. “This tariff situation isn’t so much a pricing issue as it is just a logistical mess,” he noted. Companies are adapting in uneven ways—Coca-Cola, for example, reduced exposure to metal tariffs by shifting some production from cans to plastic, while Campbell’s and Hormel, heavily reliant on cans, had few options.

Industry surveys reflect the strain: nearly 60% of business leaders report significant effects from new or retaliatory tariffs, and more than one-third say operating costs have risen by around 10%.

Transparency, Beaton stressed, is vital: “The better strategy moving forward is building trust through transparent updates—explaining how decisions are made, like why a recipe changed or why a price rose.”

Strategies to Mitigate Risk

Manufacturers are taking a range of steps to adapt: diversifying suppliers, nearshoring production, narrowing assortments, leveraging bonded warehousing and free-trade zones, and exploring alternative packaging. Stockpiling pre-tariff materials has also helped some companies buffer immediate shocks.

Restaurants and retailers are being squeezed too. With margins already thin, higher costs for packaging, transportation, and raw materials are difficult to absorb.

Consumer Reactions

Consumers are feeling the effects. Beaton cited data showing 71% of Americans worry tariffs will hurt their bank accounts, while 37% report tariffs are a source of stress. Globally, 42% of consumers are already buying fewer products due to rising costs.

“The real cost is not a late shipment—it’s an irritated shopper, a rattled boardroom, and a bumpy road to regain public and investor trust,” Beaton warned.

Export Challenges

Retaliation is also hitting U.S. exports. Agriculture accounted for $176 billion of U.S. exports in 2024, with about 20% of U.S. agricultural production destined for overseas markets. Tanner warned that without those outlets, food could go to waste: “If we don’t export that food, it is going to be plowed under in the fields.”

Adapting to a Shifting Landscape

Both speakers agreed that tariffs are unlikely to disappear anytime soon. Instead, they urged companies to plan for volatility, build supply chain flexibility, and maintain open communication. “What stakeholders … want to hear is that your company is flexible enough to operate effectively no matter how this tariff situation evolves,” Beaton concluded.ft