Trump administration trade deals that slap tariffs on previously exempt ‘unavailable natural resources’ are reshaping supply chains – but progress is uneven, and companies are left managing immediate financial pressure, according to experts.
Exemptions and the Indonesia precedent
The Trump administration has shown flexibility on commodities that cannot be produced domestically (e.g. mangoes, bananas, coffee), noted Tom Madrecki, executive VP of public affairs, Consumer Brands Association.
Madrecki pointed to the recent agreement with Indonesia’s palm oil production as precedent-setting.
“There’s a bullet [point] on the White House release that talks about how the United States Trade Representative (USTR) and Commerce may impose a zero or lower tariff on items deemed to be an unavailable natural resource. And there’s some obvious examples there. There’s things like palm oil from Indonesia that constitutes 80 plus percent of total US supply,” he said.
Madrecki added: “As countries secure deals with the White House, this question of unavailable natural resources might then come to bear the same way with Indonesia, could be applied to Vietnam or Cambodia, or even the EU.”
Exposure varies by product
For many categories, tariffs continue to apply where substitution is impossible, such as coffee.
Madrecki explained: “If you have Brazilian coffee, it constitutes 30 plus percent of total US supply. You can’t just swap that in, or out even, for another country that produces coffee – that’s both mathematically impossible and for reasons of growing conditions and climate conditions also impossible.”
Because these products are not grown in the US, tariffs on these natural resources will impact manufacturers’ bottom line and consumers’ wallets “until those resources are recognized as unavailable,” Madrecki warned.
Yet, not all imports face the same pressure, stressed Andy Harig, VP of tax, trade, sustainability and policy development at FMI – The Food Industry Association.
“Most food products from Mexico and Canada are USMCA-eligible and exempt from tariffs, which helps control costs,” he said. But, “seafood, coffee and certain produce are significantly affected, with tariffs exacerbating existing price increases.”
Packaging pressures
Madrecki highlighted the compounding impact of 50% tariff levels on packaging, particularly tin mill steel for canned food and other products, which is not “adequately produced here in the US.”
While the US produces “at best” 20% of the total demand of tin mill steel, the remaining production comes from Netherlands, Germany, UK and Canada, he explained.
Harig added that packaging exemptions for aluminum and steel remain rare.
“Packaging materials like steel and aluminum face similar challenges, with limited exemptions expected,” he said.
Packaging exemptions were granted during the first Trump administration, albeit not as effectively, Harig noted.
While steel and aluminum tariffs are designed to boost domestic production, “there is a capacity question,” Harig said.
It will take time for US production to ramp up, and in the meantime manufacturers are continuing to raise prices.
“As long as [manufacturers] don’t increase the prices beyond the point of tariff gains, they still come out a net winner,” Harig added.
However, Harig cautions that upcoming sectoral tariffs, i.e. tariffs impacting specific industries, could be interpreted broadly enough to include wood-related products, such as paperboard.
“A lot of that comes from Canada. Some of it comes from China. The production in the US often relies on precursor products from those countries as well, so it’s not just that they can produce more,” he said.
That dependency raises the risk of higher costs if tariffs are applied. While packaging isn’t something consumers track closely, Harig noted that it is a significant cost driver for CPG companies.
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Companies are becoming leaner
Manufacturers are doubling down on efficiency through new technology, AI and automation, Madrecki noted.
CPG companies “are low margin companies by their nature and they’re always interested in delivering value to the consumer, and nobody wants to have to raise prices,” he said.
Companies also are looking at their sourcing strategies, Harig observed.
“Companies are adapting by local sourcing, reformulation and reducing packaging costs,” he said.
However, unsurprisingly, smaller businesses may struggle more due to limited resources and sourcing capabilities,” he added.
For Madrecki, the key message to CPG companies is that volatility itself is the new reality.
“All this is very fluid,” he said. “Everything is perceived to always be subject to further negotiation. And so there’s also a bit of where the private sector is adapting to just a different state of trade policy in 2025 than it was in 2010.”
