Trump tariffs give Canadian, Mexican chocolate makers an edge over U.S. peers

[Milk chocolate bars and candies on a dark background.]
NATALIA MARNA

U.S. President Donald Trump’s trade tariffs aim to bolster domestic manufacturing—but in the chocolate industry, they’re having the opposite effect.

Higher import costs for already-expensive cocoa are putting American factories at a disadvantage compared to Canadian and Mexican competitors, _Reuters _reported, citing interviews with 11 industry executives, experts, and traders.

Under the United States-Mexico-Canada free trade pact, which the Trump administration has said remains in place, Canada and Mexico can export chocolate to the U.S. tariff-free no matter where they sourced their inputs of cocoa, a tropical crop that does not grow in the United States.

Canada also has zero tariffs on imports of raw and semi-processed cocoa, like butter and powder, while Mexico grows its beans, meaning factories both north and south of the U.S. border can produce more cheaply than those domestically, which now have to pay tariffs of between 10%-25% on cocoa inputs.

The rates could rise to 35% on August 1, the report said.

Data shows Canada's chocolate exports to the U.S. rose 10% this year.

Cocoa (CC1:COM [https://seekingalpha.com/symbol/CC1:COM]) futures climbed to $8,575 per tonne on Wednesday amid persistent supply challenges, despite some recent improvements.

Soaring cocoa prices, meanwhile, continue to pressure the chocolate industry: Hershey announced a double-digit price increase on its candy due to rising ingredient costs, while Swiss chocolatier Lindt missed first-half earnings expectations after a sharp 15.8% price hike weighed on sales.

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