F&B Winners, Losers In Trump’s Tariffs

The winners and losers in the presidential election are clear, but who will be the winners and losers in the F&B industry?

Although the prospect of new, protectionist tariffs is only on the horizon, they could create big winners and losers and potentially shift F&B loyalties and supply lines for everything from tomatoes in Mexico to garlic from China. Global giants could be hit with import costs, American beers could get a boost, private label could benefit, and U.S. producers could get help at home and face repercussions abroad.

Government intervention in the form of tariffs or taxes on imports could impact prices, margins, and market share. Consumers could be hit by what might feel like a new era of inflation, while American production could increase. Tariffs could turn out to be a top factor in F&B business, along with inflation, labor, tech, and supply lines as taxes climb up the ladder.

Despite all the dialogue about tariffs, however, there’s been little talk about how big they are today. The U.S. government, for the fiscal year that ended on Sept. 30, expected to collect $81.4 billion in tariffs and fees. That’s not even a drop in the fiscal bucket compared to the $2.5 trillion expected from individual income taxes and $1.7 trillion from Social Security and Medicare taxes. Still, tariffs could have a huge impact on industries such as F&B, where global sourcing and thin margins make tariffs a potentially huge force.

Based on what Donald Trump said when he campaigned, tariffs could have massive implications for the food and beverage industry. “To me, the most beautiful word in the dictionary is ‘tariffs,’” Trump said. “It’s my favorite word.” He called tariffs “the greatest thing ever invented” and called himself “Tariff Man.” So who will benefit and who will experience payback when tariff time arrives, if it does?

Tariff Talk

First, it’s essential to realize that campaign rhetoric and reality can differ. Trump both imposed and abstained from tariffs collected by Customs and Border Protection agents at 328 ports of entry. He also has used the “threat” of tariffs as a negotiating tool. After threatening high Mexico and Canada tariffs, Trump backed off as the United States-Mexico-Canada Agreement, a free trade agreement, went into effect in 2020, replacing NAFTA, which passed in 1994. Trump uses tariff threats as leverage, so tariff talk itself can be the end, at least in some cases.

But assuming this is all tariff talk would be a big mistake. Trump also believes in imposing tariffs, which create financial walls like the physical ones he pushed for on the border. They’re part of a protectionist philosophy. In 2018, Trump imposed tariffs of 30% to 50% on goods imported from China along with other tariffs. Higher tariffs of 10 to 20 percent nearly across the board, even 50 to 60 percent or more for China, could alter dollars and diets. Mexico also could face hefty tariffs. And they could change the F&B industry in temporary or permanent ways.

Short-Term Impacts

In the short term, tariffs paid by importers could lead to stockpiling, potentially leading to shortages and price spikes. Uncertainty also could make it harder for companies to plan, prompting hedging. The talk also comes amid concerns that F&B inflation has hit with high world food prices, making trade wars particularly treacherous.

The price index compiled by the U.N. Food and Agriculture Organization (FAO) rose 127.4 points in September, up 5.5% from a year ago to its highest since April 2023, still 20.5% below its record in March 2022. All prices except meat rose, with vegetable oil up more than 7% from the previous month. Consumers remain concerned inflation could hit, and tariffs could take a bite out of wallets, impacting demand, sourcing, and supply lines, potentially igniting backlash.

Countries

Tariffs target specific countries, giving huge gifts to some nations and punishing others in a kind of dollar diplomacy. High tariffs could hit China-based suppliers (and

those sourcing from them), as well as the E.U. and Japan, which could strike back with retaliatory tariffs. Mexico could feel the impact, with exports reportedly the source of about 40 percent of that nation’s gross domestic product and 80 percent of that to the United States. Trump could talk loudly while carrying a big tariff. Or he could strike.

The US-China trade war that Trump ignited in his first term already led to tariffs on U.S. soybeans, pork, and other agricultural products, as export markets shrank and some companies faced increased costs for imported ingredients. Tariffs are a two-way street. Local farmers took hits abroad as markets shut down. However, the act of imposing tariffs seems protective, even if it leads to problems. And in a world where perception is reality, that counts.

Companies

Companies, as well as countries, could be winners and losers. Trump, for instance, vowed to make John Deere pay tariffs for plans to move some production to Mexico. Global giants like Pepsico and Unilever, which invested in sourcing from Mexico, could face hefty tariffs. International companies like Danone, Coca-Cola, Chiquita Fresh North America, Dole, Mondelēz, and Ferraro could get caught in the web of tariffs. Constellation Brands, which imports Corona, Modelo, and Pacifico from Mexico, could see its products slapped with tariffs. Small businesses also could be hit if they cannot absorb increased costs as margins are thinned. Operations in tariff-light countries could launch as some companies boost U.S. operations. Efforts could begin to carve out deals for specific products as trade associations and lobbyists try to become winners in what could turn into a golden age for lobbying.

Consumers

Consumers could be caught in the middle of any F&B trade wars, further fueling private label. According to the Tax Foundation, the Trump administration’s tariffs resulted in $80 billion in new taxes on Americans on $380 billion in goods in 2018

and 2019. That amounts to one of the largest tax increases imposed in American history. However, because the money is paid by importers, not directly by consumers, tariffs amount to a shadow tax. Consumers pay but don’t necessarily realize that the tariff is the reason for the hike. “Taxflation” occurs, but people just see “inflation.”

U.S. companies also took hits abroad. Trump’s tariffs on E.U. steel and aluminum led to China imposing retaliatory taxes on bourbon and Harley-Davidson motorcycles. China’s tariffs on soybeans and pork targeted Trump supporters hard. Tariffs imposed on U.S. exports, along with those imposed by the United States, could be the wild card in the economy during the Trump administration.

Labor

How will Trump’s policies impact the F&B workforce? Talk about rounding up non-U.S.-citizen immigrants may hit F&B, from agriculture to food processing. Raids on factories or farms could occur at a time when F&B faces a labor shortage, although it’s hard to tell exactly how any new immigration policy will play out.

As to whether tariffs boost U.S. jobs, that’s possible, although some studies indicate that’s unlikely. A Massachusetts Institute of Technology, University of Zurich, Harvard, and World Bank study concluded Trump’s tariffs didn’t move the needle on employment. They “neither raised nor lowered U.S. employment’,” but did show a proactive president. And immigration has been a center of Trump’s campaign, making an impact upon F&B labor at least very possible.

Price of “Progress”

Retaliations are the other big price of tariffs. A study by the Peterson Institute for International Economics concluded Trump’s main tariff proposals likely would lead to retaliations, slicing a percentage point off the U.S. economy by 2026 and hiking inflation by two percentage points. Nevertheless, Trump tariffs could have all sorts of impacts due to tariff negotiations. And talking about tariffs can change the equation.

While Trump talks tariffs, the Democrats, although less vocally, have been boosting tariffs. The Biden Administration, in May 2024, imposed tariff hikes on $18 billion in Chinese goods, including semiconductors and electric vehicles. That reportedly resulted in a $3.6 billion tax increase, which, if imposed directly, would have led to pushback. Since it was an indirect tax, it was largely invisible.

Regulations Removed

While tariffs may mean higher prices, Trump is likely to lift regulations, including those related to climate change, which could lower costs. The Biden administration’s focus on F&B “price gouging” legislation also disappears. Still, navigating and complying with tariffs would likely add new regulatory costs.

And new people could mean new policies, ending some regulations and launching others. Robert F. Kennedy Jr.’s views, favoring organic foods and opposing fluoride in potable water, could find their way into policy. Kennedy also criticized the U.S. Dietary Guidelines for Healthier Americans, which could lead to a new version in the works being dumped or revised. Elon Musk could have a say not just in going to space but going to market, including policies affecting F&B.

Trump says the point of tariffs is to protect U.S. industries, and he could use them as governing tools. However, protection could also make U.S. products less globally competitive, potentially leading to lower exports. Smaller companies might back off exporting to the United States, while U.S. farmers could benefit as trade barriers hit imports, only to face backlash regarding exports. We could see a surge in U.S. beer sales and growing demand for domestic wines. In the end, if prices rise, consumers may think that’s a price they don’t want to pay for a policy that they are being told is being imposed in their interest. Regardless, it looks like tariffs are on their way. The roller coaster may get going soon, with some heading upward and others dragging further down. Get ready for the ride.