Midterms’ impact on F&B: Overview
- Democrats take control of both chambers of Congress in a blue wave midterm result
- Oil prices fall below $100 a barrel as investors focus on Iran diplomacy and potential shifts in US foreign policy
- Trade policy and tariffs remain key concerns for global food and beverage companies
- MAHA’s influence may weaken politically but scrutiny of UPFs additives and pesticides is expected to continue
- Food and beverage businesses worldwide face uncertainty over regulation trade flows energy costs and supply chains
After a ‘blue wave’ in the US midterm elections saw the Democrats taking control of both chambers of Congress, the global food and beverage industry will be monitoring its impact closely. From tariffs to energy prices, the ripple effect will be significant far beyond American shores.
Oil, trade and Iran
Oil prices affect manufacturers across the chain, from the cost of producing packaging to the transport of ingredients and products.
Oil prices fell following the midterms and are below $100 (€89) a barrel at the time of writing, “with investors focused on Washington’s next move on Iran after the US midterm elections”, according to the Wall Street Journal. “Crude futures are on track for solid weekly losses on stepped-up diplomatic efforts to bring the US and Iran back to the negotiating table and Democratic gains in the US Congress.”
Energy prices will be top of mind for F&B and “US foreign policy will be one element to watch for this”, says Thijs Geijer, economist at ING Research. “But whether we have a mild, average or cold winter will also be very influential for prices given that current storage levels are lower than last year and long-term average.”
He also points to analysis from ING on whether Trump will focus on trade policy and what that could mean for the European economy.
“With the outcome of the vote limiting President Trump’s options at home, he is likely to focus more heavily on foreign and trade policy,” according to the analysis. “The result could be greater volatility and uncertainty for the global economy. This will clearly affect Europe. A forced deal between Russia and Ukraine, to the disadvantage of Ukraine and Europe, could undermine economic sentiment in Europe. A new escalation in the Middle East would push up energy prices and harm the European economy. Europe’s latest shift towards more protectionist trade policies could bring new global trade tensions.”
“There will certainly be more pressure on President Trump to end the Iran war and seek to bring oil prices down, which will provide some relief,” says David Henig, director of the UK Trade Policy Project at the European Centre for International Political Economy (ECIPE).
But how much will change remains to be seen. “With Trump still set for two further years as president, the immediate impact of the results on his trade policy and war in Iran could be limited,” says a report by the Chartered Institute of Export and International Trade in the UK. “He retains executive powers, particularly around foreign policy and as commander-in-chief of the US armed forces, and can veto legislation passed through Congress.”
Tariffs
ING also addresses the specific issue of tariffs. As well as Iran and Russia/Ukraine, “tariffs/trade policy are likely to be the focus for the president. Tariff policy could increasingly be used to incentivise foreign partners to align with US foreign policy objectives.”
However, the Democrats will likely “feel even more confident about pushing back against President Trump’s policies on Iran and any escalation of tariffs,” it adds.
“I’m afraid that, for the time being, I don’t see a let up in the pressure on tariffs,” says ECIPE’s Henig.
And the rest...
It’s widely agreed that changes will be afoot for F&B within the US, and this will have a global impact, especially for companies that are importing in to the US and those that have operations there and trade globally. According to a post-midterms analysis by communications firm Edelman, the implications will be vast for food and beverage.
“Tariffs, trade disputes, immigration enforcement, and energy prices will remain significant pressures on agricultural producers and food manufacturers,” says the report. “Congressional investigations could examine how these factors affect consumer prices, supply-chain resilience, and corporate profitability.”
And the effect on the Make America Healthy Again (MAHA) movement is one to watch. “Electoral setbacks for several MAHA-backed candidates could weaken the movement’s political influence, but concerns about ultra-processed foods (UPFs), additives, pesticides, and corporate influence will continue to attract bipartisan attention,” it says. “Congressional investigations into Health Secretary Robert F Kennedy Jr and federal health agencies could further complicate the administration’s food policy agenda.”
Federal oversight and regulation is also a potential area for change. “New congressional leadership could intensify investigations into the US Department of Agriculture (USDA) operations and the Trump administration’s broader food and agricultural agenda. Senate Democrats will also gain greater leverage over agency nominations, including a potential new Food and Drug Administration commissioner, creating additional uncertainty around regulatory priorities and implementation.”
For food and beverage across the world, it will be a case of watch and wait to see how Trump responds and how much change the Democrats can enact after taking control of Congress.
