Recipe For Trouble: Tariffs Threaten U.S. Baking Industry With $454M In Extra Costs

The U.S. baking industry is bracing for a major financial hit — up to $454 million in extra costs this year — as a result of new tariffs on goods imported from Canada, Mexico and China, according to the American Bakers Association. This estimate came before the U.S and China revved up their retaliatory tariffs. 

These tariffs, with a wide range from 10% to 145%, affect essential ingredients, packaging, and equipment that commercial bakers rely on daily.

"American baking manufacturers rely on global supply chains for essential ingredients and equipment," the ABA stated in its March analysis. "Tariffs threaten to drive up costs and strain operations, jeopardizing businesses, workers and consumers."

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Where the Money Goes

The ABA estimates that more than half of all imports used by U.S. bakers come from the three countries now facing new or reinstated tariffs. Bakers imported nearly $1 billion in Canadian goods alone last year, including $193 million in ingredients. A 25% tariff would tack on $244 million in additional costs.

Mexico, another key partner, shipped $679 million worth of baking-related goods to the U.S. in 2024. If the full 25% tariff is applied, the cost to bakers could jump by $170 million. Chinese imports for U.S. bakers totaled $395 million in 2024. With the current trade war, this number could total nearly $1 billion in 2025. 

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Small Businesses Feel the Heat

While large commercial bakeries might have the resources to absorb some of these additional costs, small family-run businesses are especially vulnerable. One such company is Uncle Jerry's Pretzels, a 30-employee operation in Lancaster County, Pennsylvania. Co-owner Misty Skolnick told USA Today that the recent tariffs have forced her to rethink pricing and production strategies.

Skolnick and her father, Jerry, have run the business since 1988. The company already had to discontinue some popular varieties after sesame seed prices spiked. Now, with tariffs driving up the cost of imported chocolate and packaging, Skolnick worries about how long they can maintain product quality without raising prices.

"We're asking ourselves, ‘Can we afford to provide a consistent, high-quality product at a reasonable price for our customers?'" Skolnick told USA Today.

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More Than Just Ingredients at Stake

The baking industry's exposure doesn't end with imports. Retaliatory tariffs from trading partners could also threaten U.S. exports. Bakery goods are among the top categories relying on current trade protections under the United States-Mexico-Canada Agreement, according to an analysis by RaboResearch.

Canada alone accounts for three times the U.S. bakery export volume of Mexico, and new barriers could drastically reduce trade. "The impacts of Canadian tariffs would be challenging for US (food and agriculture) as a whole, but could be particularly harmful for produce growers, manufacturers of baked goods and oilseed farmers," the researchers wrote.

The Road Ahead Is Uncertain

For now, some of the tariffs are paused — notably, the 25% levies on Canadian and Mexican imports that fall under the USMCA. But the possibility of reinstatement looms large.

Skolnick is doing her best to stay calm and adapt. "We try not to panic or react to rumors or hearsay," she said. "Ultimately, we're trying to wait for the facts on the ground before we implement any big changes on our end."

Still, as costs climb and uncertainty lingers, both large and small players in the baking world may need to rethink their recipes for long-term success.

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