Trump’s trade war has an impact

deleciousfood | March 20, 2025 | Beverage | No Comments

The current trade tensions, consumers tired by inflation and an evolving regulatory landscape complicate supply chains and increased the prospect of higher food inflation later in the year, said Tom Bailey, principal analyst to consume Foods of the Dutch banking and financial services company Rabobank.

Trump administration prices are expected to increase food inflation halfway and create tensions between food producers and retailers, said Bailey. Suppliers will absorb short-term price increases, but they cannot manage increases forever, he added.

“Suppliers will want to work as hard as possible to assume part of the pain, maintain market share and stay in a good position on the shelf and be competitive. So it’s in a six -month window. Beyond that, you are starting to see the compression of the margin at a point where you have to make more prices and resume any loss, “said Bailey.

Rabobank plans that these trade tensions will persist until 2025, further complicating supply chains and increasing consumer prices, said Bailey.

In addition, countries abolish the United States from discussions on world trade, as in the case of Mexico signing a commercial partnership with the EU earlier this year, said Stephen Nicholson, a strategist from the world sector of grain and oil seeds for Rabobank, previously.

“The null game tactics come into play,” said Bailey. “We have planned that many things happen in the six months, then will be resolved. But the more the rhetoric warms up, the more I think it could last up to a year. ”

Consumers’ feeling decreases in the midst of tariff concerns

Consumers’ feeling continues to decline in the midst of tariff concerns and the prospect of a recession. The feelings of consumer feelings fell to 64.7 in the February survey, decreasing by almost 10% compared to January, because consumers expect inflation to worsen in the middle of political uncertainty, according to the University of Michigan.

Most consumers (73%) have said that prices increase food prices to some extent, according to the report on food information from Purdue University, which interviewed more than 1,200 American consumers.

“Regarding the inflationary impacts of food prices, it is still halfway. But when we talk about it in addition to cumulative inflation of 30% since 2020, each dollar counts, and this is where things become difficult for us consumers. ”

Tom Bailey, principal analyst to consumer Foods in Rabobank

The Purdue University also asked consumers to assess over 10 points the amount of government influence on food inflation, zero being the slightest influence and 10 being the most influenced.

The average consumer rating was 6.9, which shows that buyers think that “the government has a moderate influence on the price of food,” said Joseph Balagtas, professor of agricultural economy in Purdue and director of the Center for Food demands analysis and Sustainability, in a press release.

“Regarding the inflationary impacts of food prices, it is still halfway. But when we talk about it in addition to cumulative inflation of 30% since 2020, each dollar counts, and this is where things become difficult for us consumers,” said Bailey.

Food additives can further complicate supply chains

The Trump administration of the HHS secretary of the secretary of HHS, Robert F. Kennedy, also has global implications on the supply chain, said Bailey. However, many MAHA elements – clean the food system, eat more whole foods and invest in regenerative agriculture – have bipartite support, he noted.

“Michelle Obama was trying to make school lunch programs in better health a long time ago,” said Bailey. “Conceptually, healthier food is a bipartite subject, and what we have now is a republican language in healthier foods.”

Food additives receive bipartisan control

The two sides of the political aisle adopt regulations to prohibit various food additives.

Currently, the USDA and the HHS “carry out a line by line by the scientific report of the 2025 food advisory committee” and have declared that agencies “are determined to publish the final directives before its statutory deadline”, following the inaugural meeting of the Maha Commission. This month, Kennedy also called for the elimination of auto-affirmed ACRA, a process that an enterprise of food ingredients informs the government that its ingredient is sure.

Earlier this year, the FDA under administration Biden canceled its authorization from red n ° 3 due to legal technicality and animal studies, creating reformulations for many food and drinks. In addition, California Governor Gavin Newsom has published a “repression” on ultra-transformed foods, which will include the addition of warning labels on the ingredients that the State considers as a “health risk” from April 1.

CPG companies are preparing for food additive prohibitions, obtaining new ingredient providers in the process, due to various states laws, said Bailey.

California has launched the madness of state regulations linked to the prohibition of various additives like Red No. 3, and Illinois and Pennsylvania followed with their own proposed regulations, which ultimately did not succeed.

“You will not have a separate supply for California that the rest of the United States. Part of this was a little in preparation, but it is certainly accelerated and could potentially – depending on the way things go – change our food system more radically,” said Bailey.

In addition, food additive restrictions on the additional nutritional assistance program (SNAP) and school lunch programs may have an impact on food and drinking manufacturers and the economy in general, said Bailey.

Kennedy offers the prohibition of certain ultra-treble foods (UPF) and drinks from the SNAP program, reported the AP.

“Almost 12% of Americans are on instant payments – it is a large part of consumers who would be immediately limited to the purchase of certain ingredients who had colors or preservatives – it would be a little more a shock,” he developed.

Can manufacturing follow the demand?

Consumer requests for colorful foods and value -oriented foods – largely converging to create unique obstacles from the supply chain, said Bailey.

Food manufacturers are preparing for food additive prohibitions, but they may need to import European manufacturing products to respond to consumer demands and short-term regulatory mandates, he added.

In addition, Europe maintains a robust infrastructure for manufacturing private brands, which the United States may need as the private brand market increases, noted Bailey.

US private brand market

The US Private Food and Book Food Market is expected to reach new heights over the next decade, coming from its current market share of around 20% to 25-30% over the next 10 years, according to a separate Rabobank analysis. Private brand brands respond to consumer value requests, while retailers continue to invest in the brand and value proposition of these products.

“Take a bag of chips in the United States against the United Kingdom, and you have around forty ingredients for a bag of chips in the United States, and you have closer than 20 in the United Kingdom for the same product,” said Bailey. “This raises the question:” Does this mean that we will import more – the trade war on the side – products directly from Europe to the back of what is already going on with a private brand? “”

“And does that also extend in the other direction, where once we establish our manufacture and our ingredient compositions that we start to export more to Europe at the same time?” He added.

An increased demand for private and clean products will require investment in manufacturing, by cutting the food industry against other industries to compete for real estate, talent and other resources, said Bailey.

“The food industry is not only in competition between it. It competes with the automobile. It is in competition with technology. And these are major high life sectors that have a lot of money,” he said.