U.S. tariffs squeeze Canadian food and beverage sector, MNP warns

Persistent U.S. tariffs are reshaping the Canadian food and beverage industry, forcing businesses to adapt to higher costs, volatile pricing and shrinking margins, according to a new report from Matt MacDonald of MNP.

The firm says many Canadian producers initially believed tariffs were a temporary bargaining tactic but are now coming to terms with them as a long-term reality. That shift has moved the sector from “waiting out the storm” to making structural changes to survive in a volatile trade environment.

One of the most significant impacts has been price instability. Quotes that once held for 30 days may now only be valid for much shorter periods as tariff-driven fluctuations ripple through supply chains. MNP notes that this has pushed businesses to manage inventory more carefully, similar to commodity futures traders, and created hesitation around large purchases.

Rising costs are also impacting companies that straddle both the Canadian and U.S. markets. Some producers, once profitable in both countries, are now selling into the U.S. at negative margins in order to maintain a foothold. That has left many firms rethinking expansion south of the border and looking for growth opportunities in other markets.

The report highlights several sector-specific trends. Domestic support for Canadian-made products is strengthening under the “Buy Canadian” initiative, giving some businesses a competitive edge at home. Border-based firms that relied heavily on U.S. exports, however, are seeing sharper revenue declines than those located farther inland. Consumer packaged goods companies have shown more agility, redirecting long-shelf-life products to alternative markets, while the Canadian wine sector has benefited from provinces pulling U.S. products off shelves.

In response, food and beverage businesses are pursuing two main strategies. Some are collaborating across supply chains to spread the financial impact of tariffs, with farmers, manufacturers and retailers each adjusting margins slightly to balance cost pressures. Others are investing in efficiency, using automation, artificial intelligence and advanced analytics to cut operating costs and improve forecasting.

MNP says these moves reflect a broader industry realization that U.S. tariffs may remain in place for the foreseeable future.

Visit here for the full report.