Tariffs, trust and tensions: 6 challenges facing the US baking industry right now

The baking industry remains a powerhouse of the American economy, employing nearly 800,000 workers and contributing $186 billion annually.

But cracks are beginning to show. The sector is being hit from multiple directions: labour shortages, regulatory uncertainty and rising costs tied to trade policies, to name a few.

Fortunately, it’s not facing these headwinds alone. The American Bakers Association (ABA) is a steady force behind the scenes, actively advocating on the industry’s behalf.

We caught up with ABA’s Government Relations team – VP Rasma Zvaners and Senior Director Campbell Genn – at the recent ABA Convention in Orlando, Florida, to break down the six biggest challenges bakers are facing right now.

1. Tariffs are toasting the supply chain

Recent US trade policies have injected fresh volatility into supply chains for essential baking ingredients. According to the ABA, tariffs on imports from Canada, Mexico and China are expected to cost the industry around $454 million in 2025, including $244 million from a 25% tariff on Canadian goods; $170 million from similar tariffs on Mexico; and $40 million from a 10% tariff on Chinese products.

These tariffs aren’t just theoretical: they threaten to increase costs for everything from flour blends to sweeteners. This is placing strain on operations and jeopardising businesses, workers and consumers alike.

But it doesn’t stop there. In a sharp escalation, on 9 April, the Trump administration announced a 125% tariff on certain Chinese imports in early April 2025, aimed at curbing reliance on foreign manufacturing. For the baking industry, this could have far-reaching consequences – from a spike in prices for packaging materials and baking equipment, to delayed deliveries and disrupted supply chains.

These concerns remain live, despite a temporary pause on some tariff actions following industry pushback and diplomatic talks.

“We’re continuing to assess the landscape of the tariffs,” said Zvaners. “Preliminary evaluations indicate significant impacts, but we’re awaiting more detailed data from our members to pinpoint specific challenges. We’re encouraging them to weigh in with us as they may see other challenges as we move forward.”

2. Regulatory shifts: A moving target

The regulatory environment for bakers is anything but settled. Several major updates are creating uncertainty for both manufacturers and marketers:

• ‘Healthy’ redefined: On 19 December 2024, the FDA updated its definition of the nutrient content claim ‘healthy’. The new definition focuses on whole foods and does not account for phytonutrients, potentially impacting product labelling and marketing strategies.
• Front-of-pack labelling: In mid-January 2025, the FDA proposed a rule for FOP nutrition labelling, emphasising added sugars. While aimed at informing consumers, this proposal raises concerns about the effectiveness of additional information without proper nutritional education. “We’re continuing to monitor front of pack labelling,” noted Zvaners.
• GRAS reform: Discussions are underway on whether to reform the Generally Recognized as Safe (GRAS) procedures and designation. Under the current system FDA provides guidance on how companies can evaluate new food additives. Proposed reforms aim to require companies to notify regulators and provide comprehensive data for new ingredients.

3. State-level regulations: A patchwork of policies

Across the US, states are forging their own paths on food safety and ingredient rules – often faster than federal agencies. This trend is complicating compliance for nationwide brands, necessitating adjustments to comply with varying state laws:

• Artificial dyes & preservatives: California, Virginia and West Virginia have banned certain synthetic ingredients, particularly in foods available in schools.
• Additive disclosure: New York is pushing ahead with the Food Safety and Chemical Disclosure Act, which would require detailed ingredient disclosures and safety data for self-certified GRAS substances.

“We’ve seen similar laws enacted in Virginia and West Virginia, mandating the exclusion of certain dyes in K-12 meals or items made available to children during the school day,” said Genn.

And there’s little indication this wave of state-level regulation is slowing down.

4. Labour shortages: A looming crisis

The baking industry is staring down a critical workforce shortage. By 2030, projections estimate 53,500 unfilled positions in key areas such as production, maintenance, engineering, equipment maintenance and logistics. The ripple effects could be profound: a loss of 148,000 jobs; $9.7 billion in wages; $36.2 billion in output; and $3.3 billion in tax revenues.

Tackling this challenge to ensure the baking industry is a destination workplace is a top priority for the ABA. Among the strategies on the table: an industry-specific apprenticeship programme to grow talent from within; and partnerships with schools and training programmes like the Puratos Bakery School in New Jersey, which is helping build a sustainable talent pipeline.

“A top issue raised by our membership is the challenge with retention and finding workers to fill the roles that are needed,” said Zvaners. “To better understand the scale, we conducted an economic analysis to map out future challenges the industry may face.”

Overtime rule update:

In late 2024, a Department of Labor overtime rule adjustment was vacated in court. “However, this rule is still going through the legal system,” said Zvaners. “We anticipate a reassessment of labour rules. It’s early, but we’re hopeful for favourable changes that balance worker protection with business viability.”

“We anticipate a reassessment of labour rules. “It’s early, but we’re hopeful for changes that balance worker protection with business viability,” she added.

5. Egg prices are scrambling budgets

The ongoing avian influenza outbreak continues to wreak havoc on egg supply and pricing, hitting bakeries hard. In December 2024, egg prices had already surged by 8.5%, but the situation worsened in early 2025.

By February, the average price for a dozen large eggs hit $5.89 – the highest on record since 1980 – with some regions seeing prices top $8 per dozen by March. While prices have since begun to ease, with wholesale rates dipping to around $3.00 per dozen in early April, they remain well above historical norms. The USDA has warned that egg prices could rise by more than 40% this year, underscoring just how volatile the market remains.

Temporary imports from South Korea and Turkey are buying time, but it’s a short-term fix for a deeper problem.

“While the cost impacts have slightly eased, avian influenza continues to be a challenge,” said Genn. “It’s something we continue to monitor closely because eggs impact our members. Temporary import measures with countries like South Korea and Turkey are in place, but we need a long-term solution to ensure a stable egg supply.”

6. UPFs under the microscope

The debate around ultra-processed foods is heating up, especially as the term itself lacks a universally accepted definition. This ambiguity makes it difficult for bakers to respond in a consistent way and even harder to shape consumer perceptions.

“The baking industry remains dedicated to providing consumers with a wide variety of products that meet diverse dietary preferences, while prioritising food safety, nutrition and public health,” said Genn. “Our industry provides a variety of choices for the consumer, everything from shelf-stable, whole grain and enriched breads to indulgent treats. We also provide the staples used in assistance programmes like the Supplemental Nutrition Assistance Program (SNAP) and the School Meals Program.”

As the US baking industry navigates these multifaceted challenges, the ABA’s role as a conduit between the baking industry and policymakers is more critical than ever.

“We are here to strengthen public and private partnerships that support the commercial baking industry’s vital role in feeding families across the country,” said Zvaners.

Added Genn: “The landscape is evolving rapidly. From AI to nutrition policy, we’re keeping a close eye on developments that could impact the future of commercial baking.”