How Food & Beverage Companies Are Mitigating Tariff Exposure

Volatility in U.S. trade policy continues to put tremendous pressure on the food and beverage industry, with companies forced to continuously reevaluate sourcing, pricing, and supplier contracts. They must also navigate factors like storage of perishable goods and expiration dates that are specific to this sector.

When the 10% across-the-board tariffs expired July 24, the Trump administration announced new, double-digit tariffs on more than 60 countries under Section 301 of the Trade Act of 1974. This has resulted in 10 or 12.5% levees on nearly all U.S. imports, with a few exceptions. In a recent Food Institute article on this topic, Kevin Slaughter explained how the tariffs are prompting buyers and suppliers to invoke or renegotiate price-adjustment contract language specifically to share tariff exposure.

“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,” Kevin said. “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.”

Read the full article here.

Concerned about the impact of the latest round of tariffs on your business? Reach out to Kevin Slaughter or another member of LP’s Food & Beverage focus area.