PepsiCo, Conagra seek to exempt some imports from tariffs

Major packaged food makers including Quaker Oats and Folgers coffee asked U.S. President Donald J. Trump for targeted exemptions from tariffs on imports like cocoa and fruit, according to a letter seen by Reuters. PepsiCo, Conagra and J M Smucker, are requesting that Trump exempt ingredients not available from U.S. sources to protect manufacturers who otherwise buy from domestic farmers and suppliers, according to the letter, sent on Monday by a consumer products trade group representing the companies, the Consumer Brands Association.

Coffee, oats, cocoa, spices, tropical fruit and tin mill steel, used for specialty food and household goods, are among the imports listed as unavailable domestically in the letter.
“We believe targeted and carefully calibrated removal of these ingredients and inputs from tariffs is appropriate to best protect U.S. manufacturers and support (Trump’s) efforts to lower consumer inflation,” the letter said.

PepsiCo and Smucker, which have executives sitting on the executive committee of the Consumer Brands Association, did not immediately respond to requests for comment.

A spokesman for Conagra, whose CEO Sean Connolly is also on the industry group’s executive committee, said the company, the maker of Swiss Miss hot chocolate, continues to evaluate its sourcing in light of possible policy changes.

Trump’s new round of tariffs on goods from China, Canada and Mexico come at a delicate time for the U.S. packaged food and consumer product industry. Manufacturers fear having to pass new costs on to consumers, who are already buying less after double-digit inflation the last several years.

Trump campaigned to bring down the cost of living.

Tom Madrecki, vice president of campaigns and special projects for the Consumer Brands Association, said the letter is aimed at opening up a conversation with the Trump administration on exemptions.

Trade enforcement, including tariffs, he said, has to be “done strategically and (it) has to ladder back up to protect manufacturers,” Madrecki said. He noted that bamboo fiber from Australia, used in the absorbent pads for diapers, is another import unavailable domestically.

US companies including Colgate Palmolive and Edgewell face exposure to tariffs.

Colgate, which makes toothpaste in Mexico, is looking at ways to reduce the impact of tariffs. But the company doesn’t expect it will be able to fully mitigate them, its chief investor relations officer John Faucher said Wednesday at an industry conference.

“There still will be an impact both from the initial tariffs, as well as in terms of what happens with any sort of retaliatory tariffs as we look at impact with Mexico or Canada,” Faucher said.

Banana Boat sunscreen maker Edgewell said it was looking to lock in prices from Chinese suppliers on sunscreen chemicals ahead of tariffs. Procter & Gamble also said it may have to raise prices to deal with the looming trade war.