Analysis: How US tariffs are reshaping global pet trade

A sweeping package of US tariffs on imported goods marks the country’s most significant departure from liberal trade policy since the Smoot-Hawley Act of 1930.

The US weighted average tariff will increase from 6% when President Trump took office in January to nearly 35% if the full package is implemented, reaching the highest level since the 1880s.

The scale of the measures suggests a structural pivot in the US trade strategy. Pet businesses will need to navigate direct impact on costs (subject to sourcing footprint and US sales exposure), and more importantly, the second-order impact on the economic outlook and consumer sentiment.

A perspective on consumer goods overall – and pet

Consumer goods businesses face higher costs across the value chain as a direct impact of US tariffs. The indirect effect is equally, if not more, important, with implications for economic growth, consumer sentiment and market growth.​

Given the numerous pet food businesses’ supply chains in Asia, some pet companies operating in the US will be disproportionately impacted, as the tariffs applied to these countries are often material, exceeding 30%.

We expect pet companies to potentially face:

• higher costs of manufacturing and distribution, particularly for consumer brands with a high concentration of sales in the US​.
• supply chain disruptions, which reduce availability and/or delay deliveries of raw materials, intermediate goods and final products​.
• goods being rerouted from the US and flooding other markets, which will increase competitive intensity in the UK, EU and other regions at a time when the market outlook is softer across all discretionary categories​.
• weaker consumer sentiment in both the UK and US, which is playing out in consumer spending intentions at a time when some categories are under volume pressure that offsets inflationary expectations​.
• depressed share prices of international majors and potentially lower valuation of consumer assets, requiring a robust and transparent assessment of the immediate and downstream impact of US tariffs​.

Navigating the potential fallout

US tariffs will fundamentally shift the global flow of products, services and capital. Pet businesses can make some ‘no-regret’ moves now to mitigate the initial impact on margins, and implement some strategic changes to unlock value when there is more certainty about the new terms of trade engagement for global brands.

A tax perspective

• Product classification. Review the accuracy of product Harmonised Tariff codes that determine applicable tariff rates.
• Country of origin. Understand how to evidence the country of origin where goods are substantially manufactured, produced or assembled.
• Dutiable value. Identify the value of imported goods upon which taxes are calculated, excluding non-dutiable items/components.
• Tax procedures, exclusions and exemptions. Assess eligibility for tariff reliefs (e.g., de minimis rules, FTZs).
• Corporate tax management. Review wider tax management controls and policies at group and local levels.

What happened on Liberation Day?

On 2 April, the Executive Order introduced a dual framework of restrictions: broad-based ‘baseline’ tariffs alongside more targeted ‘reciprocal’ measures. The EU and China were subject to ‘reciprocal’ tariffs of 20% and 34% respectively, with certain South-East Asian economies facing even higher rates. The UK was included under the 10% ‘baseline’ category with some exemptions (e.g., pharmaceuticals).

On 9 April, reciprocal tariffs were paused for 90 days for most trading partners. The 10% ‘baseline’ tariff introduced on 5 April now applies to all countries, except China, for which a 145% tariff applies to most goods. A further revision was introduced, excluding smartphones, computers and other electronics.

On 8 May, the UK and the US announced a deal on some goods, including reducing car tariffs from 25% to 10% for UK exports (for a maximum of 100,000 cars) and removing a 25% tariff on steel and aluminum exports. However, the tariff burden on pharmaceuticals remains unclear.