The newly implemented import tariff policy in the United States has caused significant disruptions in supply chains and the food market. President Trump's administration's decision to impose high tariffs on imports from Mexico, Canada, and China has had widespread effects, particularly on the food industry, which heavily relies on imported raw materials.

Tariff Implementation and Its Impact

Last Tuesday, what was once a policy discussion became a reality. The US government imposed a 25 percent tariff on all imports from Mexico and Canada, along with an additional 20 percent tariff on Chinese products. This move has reshaped supply chain strategies, which have long depended on neighboring countries as primary suppliers.

Many companies had anticipated the changes. Sysco, one of the largest food distributors, reviewed thousands of suppliers to assess potential impacts. However, when the tariffs were officially implemented, real challenges arose, particularly for products that are difficult to replace, such as avocados.

Avocados: The Hardest-Hit Commodity

Most avocados in the US come from Mexico, the world's largest producer. During the winter, domestic US production is nearly nonexistent, making dependence on imports inevitable. With the 25 percent tariff, avocado availability and prices are now under threat. “We don’t have enough domestic alternatives to meet demand,” said Victoria Gutierrez, Sysco's head of merchandising.

Companies now face a difficult decision: absorb the tariff costs or pass them on to consumers. Some major companies have taken the following approaches:

Food and Beverage Industries Also Affected

In addition to fruits and vegetables, the new tariffs are impacting the coffee, snack food, and alcoholic beverage industries. Companies like Westrock Coffee are seeking new sources to replace Mexican coffee, while food and beverage manufacturers are also facing increased pressure:

Supply Chains in a State of Uncertainty

During the COVID-19 pandemic, many companies diversified their supply sources to reduce reliance on a single country. However, the new tariffs have disrupted these strategies once again. “We used to have one supplier per product, but now we have two or three from different countries,” Gutierrez explained. Nevertheless, these efforts have not been enough to counteract the effects of the newly imposed tariffs.

Additionally, external challenges such as climate change and disease outbreaks have further worsened the situation. For example, the avian flu outbreak that previously drove up egg prices highlights how vulnerable supply chains are to various external factors.

Conclusion

The new import tariff policy has disrupted supply chains and driven up food prices in the US. Major companies must now adapt to this new reality, while consumers are likely to face higher costs. In this period of uncertainty, flexibility and long-term supply chain strategies are more crucial than ever.

Tradeasia International is a leading supply chain company specializing in various industries, including food-related products. As businesses navigate the challenges posed by new tariffs, Tradeasia provides reliable solutions to maintain stability in supply chains.

This article is adapted from The New York Times.