- The US has imposed tariffs of up to 25% on imported cocoa, which increases the cost of domestic chocolate production.
- Canada and Mexico can export chocolate to the US duty-free, giving them a competitive advantage.
- From 1 August 2025, the US will introduce a 25% tariff on goods from India, which could hit trade worth $87 billion a year.
- India may respond with retaliatory measures, deepening trade tensions between the countries.
US cocoa tariffs undermine competitiveness of local manufacturers
Donald Trump’s administration, as part of its policy to support domestic production, has imposed tariffs of between 10% and 25% on imported cocoa products, a key raw material for the US chocolate industry. What’s more, from 1 August, rates could rise as high as 35%. For US producers, who do not have the ability to source cocoa domestically, this means a significant increase in production costs.
Meanwhile, competitors from Canada and Mexico, covered by the USMCA agreement, can export chocolate to the US duty-free, regardless of the origin of the cocoa. Canada does not impose tariffs on cocoa intermediates and Mexico has its own plantations. This puts local US producers such as Hershey and Taza Chocolate at a cost disadvantage. Taza had to pay more than $24,000 in duties for one shipment of cocoa from Haiti, and further containers can generate costs in excess of $30,000. The company has already raised retail prices for its products, and Hershey has decided to make another round of increases in response to commodity price pressures, although not directly related to tariffs.
India subject to new tariffs under ‘America First’ policy
The US has announced that it will impose 25 per cent tariffs on imports of goods from India from 1 August 2025. The reason, according to President Trump, is that India’s tariffs are too high and non-tariff restrictions make it difficult for US products to access the market there. The US has also criticised India’s strategic relationship with Russia and China, particularly in the context of energy and military equipment imports.
The decision marks a break in negotiations on a partial trade agreement that was to be concluded by autumn 2025. The new tariffs could significantly hit India’s exports to the US, which were worth around $87 billion in 2024 and included textiles, pharmaceuticals, jewellery and petrochemicals, among others. The US currently has a trade deficit with India of $45.7 billion. Despite earlier pledges to increase trade to $500 billion by 2030, India may choose to retaliate with US agricultural, energy and industrial exports.
