McCormick plans price increases ahead of latest tariffs from Trump

McCormick & Company recently faced a significant challenge when President Donald Trump introduced far-reaching tariffs that directly impacted the company’s operations. Two weeks prior to this announcement, McCormick had expressed concerns about the potential effects of tariffs on its business. However, the actual tariffs implemented by President Trump on April 2 sent shockwaves through the corporate world and led to a dramatic downturn in the stock market.

In response to these tariffs, companies like McCormick are now grappling with how to navigate this new landscape. As the largest spice company globally, based in Hunt Valley, McCormick is facing a period of uncertainty. Despite being approached for comment, the company has remained tight-lipped about its plans to address these challenges.

In a recent filing with the U.S. Securities and Exchange Commission, McCormick cautioned investors about the potential risks posed by the tariffs imposed on China, Canada, and Mexico. The company highlighted the precarious nature of the situation, emphasizing that ongoing trade policies could negatively impact its business operations.

The escalating trade tensions have not only been maintained but have also intensified. All countries now face a 10% tariff, with some countries, like China, facing a staggering 104% tariff, and India grappling with a 27% tariff. McCormick, which sources its products from approximately 80 countries, may face hurdles due to these tariffs, impacting goods like cinnamon sourced from Indonesia and Vietnam, facing tariffs of 32% and 46%, respectively.

Prior to the announcement of these tariffs, McCormick had outlined plans to use “targeted price adjustments” to counteract the levies. The company acknowledged the possibility of price increases affecting sales volumes and overall financial performance. Quarterly reports typically list risk factors, and in March, McCormick specifically highlighted the potential risks associated with trade policies.

As a result of the tariff announcements, McCormick’s stock value experienced a significant decline, dropping more than 10% in a short period. Concurrently, the company is also making adjustments to certain products to align with standards set by U.S. Health and Human Services Secretary, Robert F. Kennedy Jr. These changes may involve reformulating products that contain specific food dyes and sodium.

In light of the recent Food and Drug Administration ban on Red No. 3, McCormick is actively looking to modify products that incorporate this food dye, such as icing, sprinkles, and imitation bacon bits. Brendan Foley, the company’s chairman, president, and CEO, indicated that there is a surge in reformulation activities to comply with regulatory standards and consumer expectations.