2025 Trade War Impact
The 2025 trade war has sent shockwaves through the global chocolate industry, disrupting supply chains, driving up production costs, and reshaping market dynamics. Major economies, including the United States, Canada, China, and the European Union, have imposed retaliatory tariffs, leaving chocolate manufacturers struggling with new financial and logistical hurdles. These trade tensions have emerged at a particularly vulnerable time for the industry, which is already grappling with a severe cocoa crisis. Extreme weather conditions and crop diseases in key cocoa-producing regions have driven prices to record highs, exacerbating cost pressures. For chocolate makers, this dual challenge of trade barriers and skyrocketing raw material costs threatens profitability and could lead to higher consumer prices, production cutbacks, or reduced product availability.availability.
Escalation of Global Trade Tensions
As 2025 unfolds, intensifying trade conflicts between major economies have introduced new challenges for the chocolate industry. The United States, for example, has imposed steep tariffs on various imports, triggering retaliatory measures from key trading partners. These actions have disrupted global supply chains, raised production costs, and heightened market uncertainty. According to the International Chamber of Commerce, business leaders worldwide are increasingly concerned about the lack of predictability in global trade policies, which is making long-term planning and investment in the chocolate sector more difficult. [1]
Impact on Chocolate Manufacturers
Chocolate manufacturers have been directly affected by this trade war, global tensions, increased costs and operational challenges. The surge in cocoa prices has been particularly impactful. Cocoa prices have skyrocketed in recent months, reaching historical highs of nearly $10,000 per metric ton earlier this year. [2] This surge has strained profit margins, especially for smaller confectionery producers, some of whom have struggled to absorb the higher costs. Larger companies, while better equipped to manage diversified supply chains, are also bracing for prolonged cost pressures. [3] Swiss chocolatier Lindt & Sprüngli, for example, produces 95% of its U.S.-sold chocolates in five American facilities. However, with Canada’s retaliatory tariffs affecting U.S.-made products, Lindt plans to shift its Canadian supply chain entirely to its European operations. This strategic move aims to circumvent the tariffs and prevent potential consumer backlash against American-made products in Canada.
Hershey has adjusted its financial outlook in response to these challenges. The company now expects 2025 earnings to deteriorate, reflecting higher sourcing prices for cocoa. [4] Similarly, the Noosa Chocolate Factory in Australia has committed to maintaining chocolate prices despite rising global cocoa costs, which have surged to 50-year highs. The company recognizes the financial strain on customers and is committed to delivering high-quality, handcrafted chocolates without price hikes or quality compromises.
Similarly, major U.S. food companies such as PepsiCo and Conagra have sought exemptions from tariffs on specific imports, including cocoa, which is essential for chocolate production. These companies argue that certain raw materials are not available domestically and that tariffs could exacerbate consumer inflation. [5] The Consumer Brands Association has advocated for targeted exemptions to mitigate the trade war’s impact on the industry.
Market Outlook for 2025
Despite these challenges, the global chocolate market is projected to continue growing. Revenue in the chocolate confectionery market is expected to reach approximately $140.12 billion in 2025, with an anticipated annual growth rate of 4.89% from 2025 to 2030. [6] This growth is attributed to increasing disposable incomes in developing countries and a rising demand for premium and specialty chocolate products.
However, the ongoing trade war introduces uncertainties that could temper this growth. Tariffs increase costs for manufacturers, potentially leading to higher prices for consumers or reduced profit margins for companies. Additionally, supply chain disruptions could result in product shortages or delays, affecting sales and brand loyalty.
In response to these challenges, stakeholders across the industry are taking proactive measures. In Indonesia, cocoa farmers are collaborating with businesses and organizations to combat the adverse effects of climate change and underinvestment, which have driven cocoa prices to unprecedented heights. These collaborations aim to sustain and revitalize cocoa farming, ensuring a stable supply for the chocolate industry. [7]
The 2025 trade war has compounded existing challenges within the global chocolate industry, leading to strategic shifts among manufacturers and influencing market dynamics. While the industry shows resilience with projected growth, the interplay of trade policies, cocoa supply issues, and market responses will shape its trajectory in the coming years.
Sources:
- International Chamber of Commerce: Global Trade Outlook 2025: Industry Insights (Feb. 14, 2025)
https://iccwbo.org/news-publications/news/global-trade-outlook-2025-industry-insights - J.P.Morgan: Rising cocoa prices – Will the chocolate crisis continue in 2025? (Dec. 2, 2024)
https://www.jpmorgan.com/insights/global-research/commodities/cocoa-prices - Scandinavian Capital Markets: Cocoa Prices Surge – A Deep Dive into Chocolate’s Meteoric Rise
https://scandinavianmarkets.com/2025/01/17/cocoa-prices-surge-a-deep-dive-into-chocolates-meteoric-rise - Seeking Alpha: Hershey – Cocoa Price Turbulence Continues (Mar. 11, 2025)
https://seekingalpha.com/article/4766418-hershey-cocoa-price-turbulence-continues - Reuters: US food giants PepsiCo, Conagra seek to exempt some imports from tariffs, trade group says (Mar. 12, 2025)
https://www.reuters.com/business/retail-consumer/us-food-giants-pepsico-conagra-seek-exempt-some-imports-tariffs-trade-group-says-2025-03-12 - Statista: Chocolate Confectionery – Worldwide
https://www.statista.com/outlook/cmo/food/confectionery-snacks/confectionery/chocolate-confectionery/worldwide - AP News: Indonesia’s cocoa farmers work with businesses to fight the bitter impact of climate change (Mar. 15, 2025)
https://apnews.com/article/cocoa-climate-change-indonesia-chocolate-farming-154f76b4de3fa5eb2d81c70c0a7ebe77