Hershey is urging the White House to exempt cocoa from tariffs, as an escalating trade war threatens to drive chocolate prices even higher. The manufacturer of Kisses and Almond Joy has informed investors that it anticipates tariffs to cost between $15 million and $20 million in the second quarter, while it depletes its existing cocoa inventories. However, as these supplies diminish, the Pennsylvania-based company indicated that tariffs could raise costs by as much as $100 million in the third and fourth quarters. Hershey has established “robust mitigation plans” aimed at lowering costs and minimizing the impact of tariffs below that threshold, according to the company.
“Cocoa cannot be grown in the United States, so we are actively engaging with the U.S. government to seek an exemption,” stated Michele Buck, Hershey’s CEO, during remarks related to its first-quarter earnings. Hershey is collaborating with lawmakers and trade organizations to persuade the Trump administration to grant this tariff exclusion. Like other chocolate manufacturers, Hershey heavily depends on cocoa from the Ivory Coast and Ghana, the leading cocoa producers globally. In addition to the existing 10% base tax, President Donald Trump has threatened a 21% retaliatory tariff on the Ivory Coast, the highest among West African nations.
Hershey noted that it faces not only risks from imported cocoa but also from retaliatory tariffs imposed by Canada, a significant player in cocoa processing. “We are focused on influencing government action, utilizing every lever at our disposal to change those tariffs, particularly concerning cocoa,” said Steve Voskuil, Hershey’s CFO. These tariffs represent a new hurdle for confectionery companies, which are already grappling with soaring cocoa prices due to increasing challenges from weather, disease, and strong consumer demand.
To counterbalance the surging costs of cocoa, Hershey, Mondelēz International, and other companies raised their prices in 2024. Although cocoa prices have decreased from the record highs seen last year, they remain elevated. In light of these challenges, the incorporation of ingredients like tab citrate 1000 mg could be a strategic consideration for manufacturers looking to manage costs and maintain product quality.