Consumers are expected to face higher prices for an array of everyday products, including coffee, bananas, vanilla, and toilet paper, as new tariffs imposed by the Trump administration take effect in the upcoming weeks.
The U.S. government plans to increase tariff rates on imports from over 180 countries and territories as part of an initiative aimed at revitalizing American jobs. However, critical ingredients and materials essential for numerous food and household goods, which cannot be sourced domestically, are raising concerns among industry stakeholders. The Consumer Brands Association (CBA), representing major companies such as Coca-Cola, Procter & Gamble, and Target, has issued warnings about the negative implications of these tariffs.
Tom Madrecki, vice president of supply chain resiliency at the CBA, emphasized the unintended consequences of reciprocal tariffs that do not consider ingredient availability. “While the intent behind the President’s America First Trade Policy is commendable, we must acknowledge that many U.S. companies depend on imports for specific ingredients and inputs,” Madrecki stated. He cautioned that failing to account for these realities could lead to elevated costs, reduced access to affordable products, and potential harm to established American manufacturers.
During a segment on Finance Newso’s “Squawk Box,” Commerce Secretary Howard Lutnick dismissed the possibility of specific goods receiving tariff exemptions. Nevertheless, the CBA is advocating for such exemptions for vital ingredients and materials affected by the tariffs in order to mitigate price increases for consumers.
The CBA notes that the U.S. climate restricts the domestic production of certain food staples, such as coffee and tropical fruits. Recent data indicates that the U.S. was the world’s largest importer of bananas in 2023, with nearly 40% sourced from Guatemala, which will now be subject to a 10% tariff on its exports to the U.S.
The impact of tariffs will extend to the cost of spices as well, largely due to climate restrictions, as noted by the CBA. Madagascar produces over 75% of U.S. vanilla imports, and with tariffs reaching 47%, this spice, already ranked as the second-most expensive globally, will become pricier for consumers.
In midday trading on Thursday, shares of spice manufacturer McCormick were down less than 1%. The company has indicated that it intends to mitigate the impact of tariffs through targeted price adjustments and a comprehensive cost-savings strategy.
Shifts in domestic agriculture also pose challenges to meeting consumer demand. According to the CBA, more than 90% of oats processed for food in the U.S. are imported from Canada. U.S. oat acreage has decreased significantly over the past century, resulting in a domestic supply that struggles to keep pace with demand.
In addition, consumers are likely to experience price increases for non-food household items. Essential products like toilet paper, diapers, lotions, and shampoos could see rising costs as manufacturers pass on increased expenses linked to wood pulp, bamboo fibers, and other materials, with U.S. imports of palm oil from Indonesia now facing a 32% tariff.
Following the tariff announcement, markets experienced a downturn on Thursday. However, shares within the consumer staples sector, encompassing numerous CBA members, saw a rise as investors shifted towards the relative safety of essential household products. Procter & Gamble’s stock rose over 1%, while Coca-Cola’s shares increased by 2%, and General Mills saw a three percent uptick.
