The toll of tariffs on the baking industry

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The toll of tariffs on the baking industry

1 Jan 2026

Maggie Glisan

Maggie Glisan covers consumer trends and emerging markets for the Commercial Baking media group. She spent the bulk of her 15-year career as the senior food editor at Better Homes and Gardens, where she was responsible for producing, writing and editing stories and developing recipes for the monthly magazine and special interest publications. Prior to that she worked as graphic designer and assistant art director in the Food Group at Better Homes and Gardens, where she took on an increasing role in content creation and editorial development.

KANSAS CITY, MO — Another day, another headline. “US Slaps 34% Tariff on Chinese Palm Oil” … “EU Imports Hit With 15% Surcharge” … “Canada and Mexico Tariffs Climb to 35%.” For commercial bakers trying to keep production running, it can feel like whiplash. Rising costs, supply chain headaches and unpredictable trade policy are no longer just news; they’re shaping daily decisions in the bakery.

From ingredients like cocoa and vanilla to specialized machinery, the global supply chain affects nearly every aspect of bakery operations. But with tariffs on Canada and Mexico ranging between 25% to 35%, the EU at roughly 15%, and China at approximately 34%, the economics of the baking business are under strain.

Insights on ingredients

According to Thomas Bailey, director of government relations for the American Bakers Association (ABA), these countries account for nearly two-thirds of US baking imports.

“The biggest impacts are being felt in ingredients, packaging and equipment, things bakeries rely on every day to keep production running,” he said. “Our research shows there is a $744 million estimated added cost for industry-imported ingredients and supplies due to global tariffs.”

Shawn Marie Jarosz, founder of trade consultancy TradeMoves LLC, described the current tariff environment as turbulent and dynamic, forcing baking companies to become quasi-experts in trade regulations.

“It’s like drinking from a fire hose,” she said. “People have to become trade and tariff experts just to keep up, which takes time away from actually running their business.”

Tariffs are making it harder for American bakers to access the ingredients and equipment they need. Many essential items, including cocoa, vanilla, palm oil and tropical fruits, are not produced on a commercial scale in the US.

“Tariffs on these products limit access to essential inputs that American bakers can’t source domestically,” Bailey said.

Suppliers are feeling the trickle-down effects, too. John Howard, business development manager at Farinart, a Canadian cereal ingredient supplier specializing in customized blends and bakery mixes, described the initial rush by US companies to source locally in order to avoid import costs.

“It’s become a bit of a game of Whack-a-Mole,” he said. “Everyone scrambled to adjust when tariffs hit, but now we’re seeing the dust settle, and many companies are realizing that food products are exempt from tariffs under the current United States-Mexico-Canada Agreement (USMCA), which is enforceable until 2026. Also, companies evaluating local options didn’t always find a better deal. After the initial scramble to source locally, companies are stepping back, re-evaluating strategies and exploring longer-term solutions.”

In some cases, tariff-driven demand for domestic ingredients has led suppliers to raise prices opportunistically, prompting buyers to re-evaluate their sourcing strategies, including returning to Canadian or other foreign suppliers.

“Our research shows there is a $744 million estimated added cost for industry-imported ingredients and supplies due to global tariffs.” — Thomas Bailey | director of government relations | American Bakers Association

Howard noted he’s seeing clients slowing down and evaluating costs. He stressed that open communication is crucial for navigating change, allowing suppliers and buyers to build solutions that protect innovation and budgets.

“It also opened the door for us to build even stronger relationships with our customers,” he said.

Howard encourages proactive conversations ahead of the USMCA review scheduled for July 2026, ensuring bakeries are aligned and prepared for any changes.

Equipment makers react

Tariffs aren’t just hiking up ingredient costs; they’re also putting a squeeze on bakery equipment. Jodi Guthrie, strategic growth specialist at Coastline Equipment, a food processing equipment manufacturer, described a “make it last” mentality taking hold across bakeries. Faced with higher costs for machinery and materials, many baking companies are choosing to repair and/or maintain existing systems rather than invest in new ones.

“Everyone seems to be asking, ‘How can we Band-Aid it?’” Guthrie said. “‘How much duct tape can we wrap around things to just keep the budgets in check and hope that the wind will blow in the right direction?’”

On the other hand, Eric Riggle, president of Rademaker USA, emphasized that uncertainty, not tariffs themselves, is the main factor in delaying decision-making.

“We’re not seeing projects get cancelled,” he said. “People still need to invest in automation because, on the other side of all of this, we still have a workforce issue that’s very real and not going away anytime soon. But it does slow down the decision-making process.”

To navigate this turbulence, Riggle highlighted the importance of education and communication.

“A big part of it is educating people — answering questions, clarifying misinformation and helping customers understand what tariffs actually mean — so they can plan accordingly,” he explained.

For companies like Rademaker, long delivery cycles (sometimes upwards of nine to 12 months) make clear, transparent communication essential for maintaining strong customer partnerships.

Rademaker is also experimenting with creative ways to reduce tariff impact. By performing final assembly in the US rather than importing fully built machines from Europe, the company can reduce the dutiable value (and the tariff bill) for its equipment. Its first pilot, a gluten-free bread line set to be assembled domestically starting in January, will test cost efficiency and customer benefit compared to fully imported machines.

This has been adapted from the 2025 Innovations Annual of Commercial Baking. Read the full story in the digital edition here.

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