KANSAS CITY — Tariffs and poor crops are stressing supply chains, making it riskier to source raw materials solely from a single geographic area. Maneuvering quickly and wisely may help save on input costs for ingredients such as vitamins, spices, sweeteners and cocoa.
President Donald Trump has placed tariffs on China in both of his presidential administrations, leading food companies to seek other sourcing options.
“The most immediate and powerful strategies are diversifying sourcing — either domestically or shifting to non-tariff countries — and exploring nearshoring or reshoring production,” said Crystal Grainger, director of growth and innovation for HowGood, a sustainability database verified by The Carbon Trust. “One of the difficulties companies face in this is that it’s difficult to understand the trade-offs. You may have already completed your price and sustainability assessments, and it can be hard to compare apples-to-apples with a new supplier. For this reason, it’s critically important to use standardized carbon accounting frameworks like PACT (Partnership for Global Transparency) to ensure you’re able to assess new suppliers appropriately.”
China sent $395 million worth of goods to US bakers in 2024, including $15 million in packaging, $13 million in ingredients and $11 million in equipment, according to the American Bakers Association, Washington. In total and not just from China, US commercial bakers paid $182 million in tariffs from January to June of this year on raw materials, ingredients, equipment and supplies, compared with $70 million in the same time of the previous year, according to the ABA.
“We typically see high-volume, cost-effective ingredients imported from China,” Grainger said. “This includes certain key vitamins (like vitamin C and various B vitamins) and essential sweeteners (such as sorbitol, dextrose and trehalose). We also see inputs like vital wheat gluten. Relying on single-origin sourcing for these massive-volume ingredients creates a significant, often underappreciated, supply chain risk. This is one of the areas where HowGood helps procurement teams diversify and reduce risk.”
Sixteen members of Congress signed a Dec. 10 letter to President Trump that addressed the country’s reliance on China for producing vitamins and other nutrients. Among other items, the letter said the United States needs to invest in domestic manufacturing through incentives, grants and public-private partnerships and that a review of supply chain vulnerabilities is needed.
Pea protein may be sourced domestically or imported from China.
“Pea protein provides a great-tasting source of all essential amino acids,” said Misen Luu, technical marketing manager for Puris, a Minneapolis-based pea protein supplier. “Once you pick the right ingredient, the game becomes about supply stability. That means being strategic with your contracting plan to manage market volatility over the long haul. You should always demand complete supply chain transparency, from the initial grower to the final product, to confirm scalability. Crucially, prioritizing domestic sourcing keeps you clear of messy tariff implications, mitigating risks such as poor crops or overseas shipping delays.”
The US International Trade Commission in July 2024 determined that imports of certain pea protein from China were sold in the United States at less than fair value and subsidized by the Chinese government, which led to anti-dumping and countervailing duty orders on the Chinese imports.
“These massive duties, sometimes over 600%, were imposed because the International Trade Commission determined that Chinese exporters were unfairly subsidized and were ‘dumping’ products,” Luu said. “This trade action has strengthened domestic North American suppliers.”
American companies are not allowed to bypass the duties by routing the Chinese pea protein through a third country that is not subject to tariffs, Luu said. US Customs and Border Protection monitors for transshipment, which is the practice of rerouting goods through nations like India to evade anti-dumping and countervailing duties.
“Attempting this evasion is considered fraud and exposes companies to severe financial penalties and significant fines of up to three times the underpaid duties,” Luu said.
Spice strategies
US companies face tariff costs on certain spices from Asian countries.
“While the US is very strong in the processing side of the spice industry, the unfortunate reality is that the vast majority of common, high-volume spices — the ones that require those tropical climates like pepper, turmeric and cinnamon — are simply not grown domestically at a commercial scale,” Grainger said. “Domestic sourcing is much more feasible for certain herbs, chili peppers and paprika.”
McCormick & Co., Hunt Valley, Md., is dealing with tariffs on spices. After its third quarter ended Aug. 31, the company raised its total gross annualized tariff exposure for the fiscal year to about $140 million from prior guidance of $90 million.
“For 2025, we continue to expect to offset most of the tariff impact, but it’s worth noting that not all of our mitigation efforts are permanent, and this will need to be addressed next year,” said Marcos Gabriel, chief financial officer for McCormick, in an Oct. 7 earnings call to discuss third-quarter results. “As we look ahead to 2026, we plan to offset as much of the incremental impact as we can with productivity savings across the P&L (profit and loss), alternative sourcing, supply chain initiatives and, of course, leverage our revenue management capabilities, including pricing.”
The tariff impact decreased on Nov. 14 when an executive order from President Trump exempted more than 200 agricultural and food inputs from tariffs. Inputs used in baking included vanilla beans, cinnamon and various kinds of nuts.
“As we understand, the November announcement from US administration eliminated tariffs on vanilla beans that had been imposed earlier in 2025, but importers tell us that, while the news is welcome, there is still uncertainty about what the future may hold,” said Prossy Tumushabe, executive director of VANEX (the Association of Vanilla Exporters of Uganda Ltd.). “As the food industry learned during COVID, reliance on a single origin for ingredients is a risky proposition. Considering tariffs and other uncertainties, Uganda has seen a lot of new buyers looking to diversify their sourcing strategies to mitigate risk.”
VANEX offers an alternative source for vanilla from Madagascar, which produces a majority of commercial vanilla globally but is subject to unstable prices because of weather impacting crops.For example, the cyclone Enawo in March 2017 struck a significant portion of the vanilla crop in Madagascar.
“Ugandan vanilla exports have increased significantly in the past couple of years,” Tumushabe said. “Reading between the lines, what we see from buyers is not simply a strategy of jumping from one origin to the next but rather diversifying their sourcing strategy to reduce risks associated with any one country, whether that be tariffs, political unrest, catastrophic weather events or otherwise.”
Companies may consider whether purchasing artificial vanilla flavoring would reduce risk.
“But when it comes to tariffs, much of the US supply of artificial vanilla comes from China, which is still impacted by tariffs — not to mention the efforts being made in the US to push food manufacturers to maximize their use of natural, healthy ingredients,” Tumushabe said. “These factors, along with the irreplaceable flavor characteristics of natural vanilla, seem to suggest that natural vanilla is a better fit for the current market and trade climate.”
PT Minyaci Kehidupan Indonesia, which offers vanilla from Indonesia, said it is receiving interest from US buyers, especially from food manufacturers seeking Grade A vanilla beans for premium extract production. The company said its vanilla supply chain lies mainly in Java and Sulawesi, where the climate produces beans with high moisture content of 25% to 35% and rich aromatic compounds.
Cocoa costs
Poor crops and high prices in the cocoa industry point to a need for diverse sourcing. The Ivory Coast and Ghana have been the world’s largest cocoa-producing countries almost uninterrupted since the early 1900s as crop disease destroyed crops in South and Latin America, said Adam Frost, a trade analyst for Chicago-based Blommer Chocolate Co.
“Cocoa trees are limited to growing in tropical climates with strong rainfall and warm, consistent temperatures much like Ghana and the Ivory Coast,” he said. “While not native, cocoa was introduced to West Africa in the late 19th century, where it became widely grown because it was profitable and well-suited to smallholder farming. Over the following decades, these two countries developed specialty knowledge and strong supply chains that cemented their position as cocoa-producing world leaders.”
After poor weather and smaller crops in the two West African countries, cocoa bean prices rose over $10,000 per tonne in recent years, when they were typically below $3,000 per tonne previously. ICE cocoa futures for December were trading at $6,226 per tonne on Dec. 12.
Zurich-based Barry Callebaut noted that at the beginning of its 2024-25 fiscal year, cocoa beans were selling for ₤5,332 ($7,133) per tonne on the London terminal market. Prices rose to as high as ₤9,425 ($12,645) per tonne before closing the fiscal year on Aug. 31 at ₤5,302 ($7,113) per tonne.
“We have been diversifying our sourcing with increased purchases from origins like Brazil and Ecuador, which do have significantly shorter cash cycles,” said Peter Vanneste, chief financial officer of Barry Callebaut, in a Nov. 5 earnings call to discuss fiscal-year results.
Cocoa and chocolate prices had been “relatively stable” for decades, said Peter Feld, chief executive officer of Barry Callebaut.
“We all know what happened over the past two years,” he said. “The first price spike in ’24, making chocolate three times more expensive within four months, a second spike in ’25. Today, we’re still two times higher compared to historic levels.”
Blommer and other companies are building supply chains in countries like Ecuador, Peru, Colombia and Indonesia.
“Each origin has its own unique challenges,” Frost said. “Cocoa trees take years to develop and produce, delaying the ability to quickly scale and increasing the initial investment required. Climate (rainfall and temperature) and soil conditions vary by origin, presenting new operational challenges and risks. Further adjustments must be made due to differences in local farmer practices.”
American ginseng
In botanicals, American ginseng (Panax quinquefolius) is native to North America, according to BioVivo Science, Jeffersonville, Ind. It is consumed often in tea or supplements for health benefits and used in soups and stir-fry products, said Jim Roza, vice president of technical services for BioVivo Science.
“Its use, however, can extend to other food formats comprised of grains such as oats, rice, wheat in the form of granola bars, bao buns, bread and noodles,” Roza said. “When formulated as an extract, American ginseng can add an aromatic, earthy flavor that complements other ingredients, in addition to being a source of ginsenosides and other polyphenolic compounds demonstrated to promote health.”
BioVivo, which sources American ginseng primarily from farms in Wisconsin, operates a 100,000-square-foot facility in Jeffersonville. American ginseng has been used in herbal medicine for centuries, especially in Asia, for its calming and adaptogenic properties, Roza said.
“Interestingly, the US Department of the Interior reported that 95% of American ginseng is consumed in Asia,” he said. “Many Americans typically associate ginseng with Asian (Panax) ginseng and are unaware of the native botanical right here in the US.”
BioVivo also offers domestically grown cranberry and broccoli seed extracts that have been shown to improve the nutritional value of grain-based foods, Roza said. Cranberries contain proanthocyanidins, which are polyphenols that have been shown to support the microbiome and the urinary tract, he said, and broccoli seeds contain glucoraphanin, an isothiocyanate that produces sulforaphane, a compound known for its immune-enhancing properties.
“In relation to tariffs, globally, they are causing supply chain issues as manufacturers seek long-term solutions to mitigate volatility in pricing and availability,” Roza said. “The growing emphasis on US-made manufacturing marks a significant step forward in addressing these challenges. This shift toward bringing more extraction and production back to the US will help offset the higher tariffs being imposed while creating new jobs and opportunities.”
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