Food Companies, Farmers And Restaurants Navigate Reality Of Tariffs

The September 8th Executive Order modifying reciprocal tariffs represents yet another twist in what has become a roller coaster ride for America’s food system. No doubt, this comes at least partially, as a result of the U.S. Court of Appeals for the Federal Circuit who delivered a significant 7-4 ruling on August 29, 2025, declaring that most of President Trump’s global tariffs are illegal. The case has been brought to the Supreme Court who has set the first week in November to hear arguments. As someone who has tracked food trends and policies for decades, I can tell you that the updated Annex II defines products exempt from reciprocal tariffs starting September 8, 2025, but the real story isn’t in the technical details—it’s in how our food companies, farmers, and restaurants are scrambling to adapt to an increasingly unpredictable trade environment.

The numbers tell a sobering story. The U.S. imports about $200 billion in food, beverages, and animal feed from Canada, Mexico, and China combined, making these trade relationships absolutely critical to our food system. Yet as I’ve tracked this industry for decades, I’ve never seen this level of sustained volatility in trade policy, where companies must constantly recalibrate their operations based on the latest tariff announcements.

Almost Half The Grocery Store Is Affected

Let me put this in perspective for shoppers: probably almost half of the products in a supermarket — about 40,000 products — will be affected by these tariffs, whether it’s the entire product or just an ingredient. It’s not just imported specialty items we’re talking about—this reaches into the heart of everyday American eating.

When walking through supermarket aisles today, it is easy to see the fingerprints of global trade everywhere. That morning coffee? About 80% of U.S. roasted imports coming from Latin America. The fresh produce section? Mexico and Canada food tariffs are among the most impactful because the U.S. imports large volumes of produce, meat, and dairy from these neighbors. Even the chocolate in your cart faces uncertainty, with major suppliers from countries now subject to varying tariff rates. The reason is simple, and it appears that the administration has finally understood.

The September 8 Executive Order rolled back tariffs on “products that cannot be grown, mined or naturally produced in the United States…or be produced in sufficient quantities to satisfy domestic demand.” We cannot grow certain foods or ingredients here. This shift toward domestic sourcing sounds patriotic in theory, but the reality is more complex. Supply chain bottlenecks could emerge if domestic production cannot keep pace with demand. We could see temporary shortages of certain items, reduced variety in our stores, and quality compromises as companies stretch to find alternatives.

The looming question is whether the other countries, in particular China, Mexico, Brazil and Canada will lift their reciprocal tariffs.

Farmers Caught in the Crossfire

The agricultural sector is experiencing what I can only describe as policy whiplash. Increased tariffs threaten the economic sustainability of farmers who have lost money on most major crops for the past three years. It’s a double blow: higher costs for essential inputs like fertilizer and the threat of retaliatory tariffs on their exports. Farmers were already facing high input costs and falling crop prices entering 2025, with many relying on government aid to offset losses last year. Now they’re caught in a double bind: 85% of the mineral fertilizer potash used by American farmers comes from Canada, while our northern neighbor also provides a quarter of farmers’ nitrogen needs. Farmers are facing impossible choices. Do they stock up now at current prices, risking cash flow problems? Or do they wait and potentially face much higher costs during planting season?

Arthur Erickson is the CEO and one of the co-founders of Hylio a Texas-based company that supplies drones to farmers that precisely applies liquid and granular inputs to crops throughout the US. He told me that a lot of farmers just don’t know what to do and the tariffs are like the final death nail in the coffin for them and these are just taking them over the edge. Before the tariffs, he said, a lot of farms were not even breaking even, and now because of the tariffs there is no one to buy their crops. In his own words “Like this is Armageddon for the farmers.”

The export side is equally concerning. China is the biggest export market for American farmers, and retaliation is already materializing. China announced it will reciprocate with 15 percent tariffs on American food and agricultural products including soybeans, meat, and chicken. Canada has imposed immediate 25% tariffs on more than $20 billion worth of U.S. imports. For farmers who depend on export markets for profitability, this isn’t just a policy debate—it’s their livelihood.

Restaurants Can’t Escape

The restaurant industry finds itself in a particularly vulnerable position. While some industries have successfully sought carve-outs and exemptions, what happens to an industry like restaurants that has no such escape hatch?

Restaurant operators are dealing with unprecedented uncertainty. What ingredients will be available next month? Which will suddenly become prohibitively expensive? This isn’t just about exotic imports—we’re talking about fundamental ingredients that define American restaurant menus.

The numbers are stark: hamburger meat prices were up nearly 21% in July compared to ten years ago, and food costs overall were up about 21% compared to four years earlier. With restaurants typically having profit margins of around 3-5%, there’s virtually no room to absorb these increases.

Some restaurants have chosen to raise prices, while others have reduced their portion sizes, neither of which their customers appreciate.

Mohaimina “Mina” Haque is the CEO of Tony Roma’s global restaurant chain. The chain and its franchisees are faced with a different kind of dilemma. She told me that they are feeling the pressure from all sides, meaning, that it has become more expensive to import the sauce from the United States or elsewhere. And when they are trying to sell franchises, they are getting pushed back because of tariffs. Haque has taken a very laissez-faire approach, to the point where they are allowing their franchise partners to find their own suppliers, as long as they get it qualified from corporate. They are, in her words, “rendering a more bespoke service.” Instead of having one contract with one supplier, they are working one-on-one with each franchise partner, because in the restaurant industry, there is a lot of margin pressure and there isn’t much that you can actually pass the cost to the consumer.

Food Companies Adapt or Struggle

Food manufacturers are implementing crisis management strategies that would have been unthinkable just a few years ago. Some are stockpiling ingredients, while others are frantically seeking alternative suppliers. Companies can also identify other viable raw material alternatives that can reduce dependency on nations heavily impacted by the tariffs.

Consumer packaged goods companies are facing their own set of challenges. PepsiCo reported elevated levels of volatility and incremental supply chain costs related to tariffs through the end of 2025, while Procter & Gamble said they are experiencing impacts on imports of raw and packaging materials from China and exports to Canada due to responsive tariffs.

The pricing dilemma for CPG companies is particularly acute. Procter & Gamble expects to begin raising prices on roughly a quarter of its products in its next fiscal year due to the “inherently inflationary” nature of tariffs, while Nestlé is “trying to take as much price as we can to cover our costs while being mindful of the consumer response”. But here’s the catch: years of leaning on price hikes to counter inflation have left CPG companies with limited pricing power.

The supply chain complexities are staggering. CPG manufacturers need access to ingredients like cocoa, spices, and coffee from around the world, and tariffs raise the cost of production while potentially leading to retaliatory barriers that limit U.S. manufacturers’ ability to sell internationally. Even companies that source domestically aren’t immune – even a company that sources and manufactures domestically could have to contend with tariffs impacting steel, machinery or packaging. Supply chain diversification takes time and money that many companies, especially smaller ones, simply don’t have. The uncertainty surrounding these trade tensions may also deter investment and disrupt long-term planning within the industry.

The Consumer Impact: Beyond the Price Tag

While much attention focuses on rising prices—and they are rising—the deeper impact is on choice and quality. Food manufacturers, retailers, and restaurants are actively seeking to reduce their reliance on international suppliers, but domestic alternatives aren’t always available or comparable.

Here’s what this means for grocery retailers: the center store is about to get a lot less crowded, and that’s actually good news for shoppers. Smart grocers will use this opportunity to continue to expand their own-brand offerings, fill their shelves with more local and regional brands, or—and this is my personal hope—create more experiential shopping zones.

I’ve been saying for years that the traditional grocery store layout is obsolete. We are witnessing big food divesting their portfolios: Unilever spinning off their ice cream brands, Ferrero buying up Kellogg’s and the impending Kraft Heinz split all will force retailers to empty their shelves. Having to walk past 40,000+ items to select the twenty or so items consumers have on their shopping list is just ridiculous; and helped fuel the growth of online grocery shopping. Instead of sixty feet of me-too salad dressings, clever retailers will reimagine how to use that space to make their stores more human and exciting.

Looking Forward: Navigating Uncertainty

As I’ve watched this unfold, one thing has become clear: the food industry’s resilience is being tested like never before. The imposition of tariffs increases costs, disrupts supply chains, and ultimately drives up grocery prices.

The September 8th modifications to the tariff regime offer some relief for certain products, but the broader pattern of policy uncertainty continues. Food companies are learning to build flexibility into their operations, farmers are diversifying their markets and input sources, and restaurants are redesigning menus around supply chain reliability rather than just cost and taste.

The food industry has weathered trade wars before, but this feels different in its scope and unpredictability. Success will go to those who can adapt quickly, plan for multiple scenarios, and maintain focus on their core mission: feeding America well, regardless of the political winds.