Feeding the Future: Global Food Trade Faces Tariff Shifts in 2025
Tariffs are increasing. The markets are getting tighter. Also, food firms around the world are being compelled to change. In this featured article, we examine how rising US-China tensions—which have resulted in tariffs exceeding 100%—are upsetting global supply chains, driving up the cost of staples like rice, oils, and spices, and endangering profit margins for both manufacturers and retailers.
The Rising Cost of Global Trade
International tariffs are escalating, profoundly affecting the global food industry. In 2025, food and beverage businesses across agriculture, manufacturing and logistics are adjusting strategies to navigate uncertainties introduced by tariff hikes, notably between the US and China. These developments are reshaping sourcing and market access, presenting both challenges and opportunities.
US-China trade tensions have led to agricultural tariffs exceeding 100%, compelling producers in both nations to manage higher costs and restricted access to vital markets. This directly impacts the food sector, with ingredients like soybeans, rice and vegetable oils facing inflated prices, straining businesses reliant on these raw materials.
For instance, American businesses dependent on Chinese imports, such as Sichuan peppercorns and fermented chilli peppers, have experienced sharp cost increases, leading to higher menu prices and reduced customer demand.
Compounding these issues, Thai rice exports – a key component of global food supply chains – have fallen by 30% in early 2025. This downturn is largely attributed to delayed purchasing decisions from key markets, particularly those affected by tariff increases. These disruptions highlight the vulnerability of global food networks, with staple goods’ prices continuing to rise.
Strategies for Trade Resilience in the MENA Region
In the Middle East, the tariff crisis is prompting a strategic recalibration. Countries like the UAE, Saudi Arabia and Egypt are accelerating efforts to reduce dependence on traditional markets by strengthening regional trade networks. With US imports becoming more expensive due to tariffs, the region is increasingly turning to Asia, Africa and intra-MENA partnerships for alternative trade relationships.
This shift is also driving investment in local food production and processing, with Gulf nations aiming for self-sufficiency in key agricultural products. By enhancing intra-regional trade and leveraging strategic location advantages, the Middle East seeks to mitigate vulnerability to global trade fluctuations, fostering a more resilient food ecosystem.
Notably, while the US has implemented a baseline 10% tariff on all imports, including those from Gulf Cooperation Council (GCC) countries, the direct impact on the Gulf is expected to be limited. Analysts suggest that the US’s trade surplus with GCC nations and their relatively low VAT rates contribute to this insulation. However, businesses are closely monitoring the situation to mitigate any adverse effects.
Adapting to the Localism Trend: The Rise of Micro-Communities
Consumer behaviour is shifting toward sustainable and regionally sourced food. The rise of micro-communities and local influencers is changing how consumers engage with food. Amid rising tariffs and inflation, consumers prioritize local sourcing and transparency, increasingly choosing products that reflect authenticity and regional origin.
For F&B business and manufacturers, this trend offers an opportunity to connect more deeply with consumers by emphasizing commitment to local supply chains and sustainability. Brands that offer quality products with a story rooted in local production are experiencing stronger engagement from today’s discerning consumers. The movement toward community-driven food systems is growing as a response to the unpredictability of global supply chains.
Innovating for Resilience
F&B companies must adapt to a rapidly changing landscape. Emerging strategies for survival and growth in this new environment include:
- Diversified Sourcing: Reducing reliance on single-source imports from tariff-heavy regions by seeking alternative suppliers in Southeast Asia or Africa.
- Technological Investment: Utilising AI and automation to streamline operations, enhance logistics efficiency, and manage inventory amid trade uncertainty.
- Regionalized Production: Considering closer-to-market production to mitigate tariff effects and reduce logistical costs.
- Strengthening Regional Trade Partnerships: Reorienting towards emerging markets in Africa and the MENA region to offset higher tariffs and lessen dependence on Western markets.
- Enhanced Brand Transparency: Leveraging commitment to sustainability and local sourcing as part of the brand narrative, resonating with consumers concerned about food security and ethical sourcing.
A New Food System Begins
The rise in tariffs presents both a crisis and a catalyst for change in the food industry. As supply chains become more fragmented, companies must pivot toward greater flexibility, resilience and regional cooperation. Navigating these shifts is challenging, but innovation and adaptation to the new global trade reality offer a clear path to success.
The food industry in 2025 and beyond will likely be defined by regional partnerships, localized sourcing and heightened consumer expectations for sustainability and transparency. By embracing these changes, businesses can not only weather the storm of rising tariffs but also contribute to shaping a more resilient global food ecosystem.
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