Trump's tariffs give chocolate makers in Canada, Mexico an edge

LONDON/NEW YORK, July 30, 2025: US President Donald Trump’s trade tariffs are meant to boost domestic manufacturing. But in the chocolate industry, they’re doing the opposite: ramping up the cost of importing already-pricey cocoa and hurting the competitiveness of local factories versus Canadian and Mexican outfits that supply the U.S., according to conversations with 11 industry executives, representatives, experts and traders.

Under the United States-Mexico-Canada free trade pact (USMCA), which the Trump administration has confirmed 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 own beans, meaning factories both north and south of the U.S. border can produce more cheaply than those domestically who now have to pay tariffs of between 10-25% on cocoa inputs. The rates could rise to 35% on August 1.

A government official said that the White House continues to monitor trends in trade and commerce and listen to industry feedback to deliver on Trump’s economic agenda.

Top U.S. chocolate maker Hershey, which mainly makes chocolate in the U.S. but has plants in Canada and Mexico, has estimated it would face $100 million in tariff costs in its third and fourth quarters if the levies remain in place.

Smaller firms like Somerville, Massachusetts-based Taza Chocolate, which produces chocolate from scratch using imported cocoa, have no alternatives to U.S. manufacturing.

Taza in May had to pay $24,124 in duties on a container of cocoa from Haiti, subject to the blanket 10% tariff imposed by Trump, a Customs and Border Protection invoice showed. Taza faces a customs cheque of more than $30,000 to release its next container of cocoa from the Dominican Republic, founder and CEO Alex Whitmore said.

“For a company our size, that’s our profit margin gone so the immediate thought is OK, the rules have changed, we just need to create the most cost-effective solution for the consumer,” said Whitmore.

He initially explored offshoring part of Taza’s manufacturing to Canada to benefit from USMCA terms, but decided against it given the significant investment of both money and time that would require, in a volatile business environment.

“Right now, the environment is so uncertain that we’re just hunkering down and hoping this will pass,” Whitmore said. “A lot of us business owners are kind of frozen.”

Customs data compiled for Reuters by Trade Data Monitor (TDM) shows Canada’s chocolate exports to the U.S. grew by 10% in volume terms in the five months to end-May, indicating some Canadian manufacturers are taking advantage of the opportunity created by tariffs.