The chocolate industry in the United States is facing a significant challenge due to the trade tariffs imposed by President Donald Trump. These tariffs have given Canadian and Mexican chocolate makers a competitive edge over their US counterparts.
What Happened: The tariffs have increased the import costs for US chocolate manufacturers. According to a Reuters report, this has made it difficult for local factories to compete with Canadian and Mexican suppliers, who can export chocolate to the US without facing any tariffs.
Under the United States-Mexico-Canada free trade pact (USMCA), Canada and Mexico can export chocolate to the U.S. tariff-free, irrespective of the source of their cocoa inputs. This has put US chocolate manufacturers at a disadvantage, as they have to pay tariffs ranging from 10-25% on cocoa inputs, a rate that could increase to 35% on August 1.
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These tariffs have led to a 10% increase in Canada’s chocolate exports to the US. Smaller US chocolate firms, such as Taza Chocolate, have been hit particularly hard, with the company facing significant tariff costs.
The tariffs have also coincided with a period of reduced consumer spending on chocolate due to double-digit inflation in recent years.
Why It Matters: Earlier in April, YouTuber and entrepreneur Jimmy Donaldson, also known as MrBeast, pointed out that the tariffs had made it cheaper to make his chocolate bars outside the US due to the absence of similar tariffs in other countries.
This highlights the unintended consequences of the tariffs, which have not only affected the US chocolate industry but also other businesses reliant on imported goods.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Ken Ruinard / USA Today Network South Carolina / USA TODAY NETWORK via Imagn Images
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