Reuters: Tariffs hurt US chocolate industry and favor Canada and Mexico

Introduced by the President of the United States Donald Trump duties on cocoa imports, which are supposed to support American production, are actually hurting local chocolate factories. About writes Reuters.

The new rates, which reach 10-25% and could rise to 35% on August 1, are driving up production costs in the US, while Canadian and Mexican manufacturers are gaining a competitive advantage.

Under the terms of the USMCA, Canada and Mexico can supply chocolate to the US duty-free, even if the cocoa is purchased abroad.

Canada has no import duties on cocoa at all, and Mexico is partially self-sufficient in beans. This allows factories in these countries to produce chocolate cheaper than in the United States, where cocoa is not grown.

Hershey, the largest manufacturer with factories in the US, Canada, and Mexico, estimates that it will pay about $100 million in duties in the third and fourth quarters of 2025 if the tariffs remain in place.

Small producers are feeling the pressure even more. For example, Massachusetts-based Taza Chocolate paid $24,124 in duties for a container of cocoa from Haiti in May. The next shipment from the Dominican Republic will cost more than $30,000.

"For our scale, it means a complete loss of profit," said Taza founder Alex Whitmore. He considered moving part of the production to Canada, but decided against it because of the large investment and the unstable situation.

According to the Trade Data Monitor, from January to May, chocolate shipments from Canada to the United States increased by 10% year-on-year. Mexico also confirms the growing interest from American companies.

The duties come at a time when cocoa prices have already tripled to record levels due to bad weather and disease in Côte d'Ivoire and Ghana, the leading producing countries. Raw materials account for 30% to 50% of the cost of a chocolate bar.

The U.S. chocolate market is estimated at $25-30 billion, with Canada accounting for about 10% of imports and Mexico 2.5%.

• In March, it was reported that American food producers ask Trump to lift the duties for certain products.