American food and beverage companies were already struggling before Canada and the European Union levied steep tariffs in recent weeks on everything from whiskey to ketchup.
Canadian tariffs on $12.6 billion in U.S. goods took effect Sunday, a little more than a week after the EU implemented its own. Mexico has announced that it will increase its current tariffs on cheese and pork, effective Thursday. The new duties are retaliatory moves to the Trump administration's June 1 tariffs on imported steel and aluminum products. China will also implement its own tariffs against the U.S. this Friday.
The tariffs put additional pressure on manufacturers in an industry that already has thin profit margins and is juggling rising costs for raw materials, increased fuel and transportation expenses and price-sensitive consumers who are resistant to paying more without meaningful wage growth.
"The problem right now is while we're seeing inflationary impact in the goods, in currency changes and because of tariffs, there's not much inflationary pass-through that you can do in pricing," former Heinz CEO Bill Johnson said Tuesday on "Squawk on the Street."
Canada's levy on soups is expected to hit Campbell Soup particularly hard.
"With a 10 percent tariff on soups and broths and tomato products — representing the core of Campbell's products that are sold in Canada and made from both U.S. and Canadian ingredients — Campbell estimates the economic impact to our Canadian business to be significant," company spokesperson Alexandra Sockett said in an email to CNBC. "We are evaluating ways to offset the potential tariff impact and working closely with our customers."
The new taxes on food products follow on the Trump administration's tariffs on imported steel and aluminum, 25 percent and 10 percent, respectively, which are also expected to squeeze the company's profits. The tin plate steel used to make Campbell Soup cans accounts for the New Jersey-based company's largest outlay for materials.
Campbell’s CFO, Anthony DiSilvestro, in May called out the expected squeeze from tariffs as having a likely impact on the company’s earnings for its fiscal year beginning July 30.
"At this stage, given what we know about accelerating cost inflation in part due to the anticipated impact of import tariffs and the continuing headwind on transportation and logistics cost, we expect our margins will be down in fiscal 2019," DiSilvestro said at the time.
That pressure comes as Campbell is already grappling with rising transport and logistics costs, For its 2018 fiscal year, which ends July 29, it expects earnings to drop by roughly 5 percent.
Although peanut butter was originally on Canada's list, the country spared the sandwich spread. But the EU's import tax on about $3.4 billion in U.S. goods took effect June 22 and included a 25 percent levy on peanut butter. While the product is not nearly as popular in Europe as in the U.S., the penalty represents a symbolic strike against the U.S.
J.M. Smucker, the parent company to the most popular American peanut butter brand Jif, had already hit a rough patch earlier this year.
The company's shares fell to their lowest point since October 2014 after it reported weak earnings for the fiscal fourth quarter on June 7. Canada's announcement that peanut butter and jellies could potentially be taxed placed additional pressure on the company. In the end, Canada decided to tax only strawberry jam.
Smucker missed Wall Street estimates by 25 cents a share as consumer food sales slid 2 percent during the three months ended April 30. Higher transportation and other costs also led the company to raise the prices of several products, including its trademark Jif peanut butter.
"Our teams are actively assessing the potential impact to our business and continue to monitor the fluidity of the tariffs issue," said Smucker spokeswoman Maribeth Burns. "Our products are primarily distributed in North America, so we have minor export business to Europe."
For PepsiCo — which owns Tropicana, the largest American orange juice brand — a Canadian tariff of 10 percent on orange juice comes as Americans' taste for its eponymous soda is waning.
CEO Indra Nooyi told analysts in a first-quarter earnings call that the North American beverages division is working through "some challenges." Those challenges include the decline in soda sales and rising operational costs across the sector.
PepsiCo did not return a request for comment.
Correction: This story has been corrected to reflect that Campbell CFO Anthony DiSilvestro did not blame the drop in the company’s earnings this fiscal year on the anticipated impact of new tariffs.