Canadian food industry is facing growing costs, unstable supply chains, and cross-border uncertainty due to U.S. tariffs. Tariffs are also adding cost pressure and volatility, while efforts are underway to regain stability.
July 2025 – According to a comprehensive analysis of the status of food manufacturing in Canada published by Richter, Canadian food producers and distributors are acting swiftly and strategically to mitigate the effects of rising costs, unstable supply chains, and cross-border uncertainty as U.S. tariffs continue to hinder international trade.
This assessment, which Richter claims, is based on information obtained from senior executives in the food industry, shows that businesses that are already negotiating the post-pandemic recovery are now dealing with escalating trade issues. Many are responding by implementing new strategies, such as changing pricing structures, diversifying supply sources, and renegotiating supplier contracts.
“Tariffs are adding cost pressure and volatility just as we’re regaining stability,” said one foodservice distributor consulted by Richter. “Many companies are now embedding tariff clauses and shifting suppliers entirely.”
Key findings from Richter’s analysis
Diversifying the supply base: Companies are reducing their reliance on U.S. inputs by exploring suppliers in Canada, Europe, and Asia. For example, one leader in beverage manufacturing is looking closer to home and finding results; “about 40% of our raw material costs are currently US-sourced, and we plan to reduce this to about 20%. We’ve found some Canadian suppliers at 60-70% of US costs with better lead times.”
Renegotiating Supplier Contracts: Operators are renegotiating contracts to include volume-based discounts, flexible pricing terms, and risk-sharing mechanisms. One leader in the meat processing industry commented: “We negotiated volume discounts and better terms with core suppliers.”
Managing Input Costs: Cost-conscious changes in materials and product formats are helping mitigate inflation without major operational overhauls.
Selective Price Increases: Tiered and SKU-level pricing strategies are being implemented to balance cost recovery and customer sensitivity. For example, a leading meat processor comments: “We adopted a two-tier pricing strategy: absorption on premium, pass-through on commodity SKUs.”
Operational Adjustments: Companies are increasing inventory buffers and warehousing capacity to manage transit disruptions and cost spikes. A leading seafood distributor comments: “We usually hold a safety stock of around eight weeks. We have pushed that out now to about 10 weeks.” However, this also raises concerns about warehousing costs, which could further erode margins if not managed carefully.
Despite these tactical responses, Richter warns that the sector requires a more strategic, long-term approach to build resilience in the face of ongoing trade instability. The firm outlines six priority actions:
- Diversify sourcing at a strategic level
- Restructure cross-border operations
- Invest in forecasting and scenario planning tools
- Redesign pricing and commercial models
- Pursue new domestic and international markets
- Explore vertical integration for critical inputs
“Tariff disruption is no longer a short-term issue, it’s a structural shift,” said the summary. “Canadian food businesses must proactively transform their supply chains, pricing strategies, and market exposure if they hope to thrive in this evolving trade environment.”
To read the full summary, click here.
About Richter
Richter is a Business | Family Office that provides strategic advice on business matters and on families’ financial and personal objectives across generations. With nearly 100 years of experience advising at the intersection of family and business, Richter has developed an integrated approach to help business owners achieve sustainable success. Whether business, personal, or both, Richter is uniquely positioned to address the needs of Canada’s most successful entrepreneurs, private clients, business owners, and business families and help them chart a clear path to shape their legacy for the future. Founded in 1926, Richter’s 600-person multidisciplinary team continuously innovates to create value for our people, clients, and community in Canada and in the US.
SOURCE Richter | Photo is for representational purposes only.
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