Hershey's cocoa talks: Tariff tensions threaten price hikes
Hershey, the well-known chocolate manufacturer, is in negotiations with the administration of U.S. President Donald Trump concerning tariffs. The company is seeking an exemption from cocoa tariffs. The chocolate giant estimates that due to these restrictions, it will be compelled to utilise its reserves, incurring additional costs of up to £16 million.
The issue arises because cocoa is not grown in the U.S., compelling Hershey to import the raw material (primarily from the Ivory Coast and Ghana). Additional tariffs could significantly affect chocolate prices.
Hershey warns of rising chocolate prices
Hershey (the producer of popular confections such as Kisses and Reese's Peanut Butter Cups) has informed investors about a potential rise in production costs. In the second quarter of 2025, tariffs could escalate the company's expenses by £12-16 million. However, in the subsequent months, costs could escalate by as much as £81 million.
The Pennsylvania-based company is working diligently with the U.S. government and trade organisations in an effort to persuade the Trump administration to exclude cocoa from the list of tariffed goods.
Currently, basic tariffs on cocoa stand at around 10 percent. However, the U.S. President has threatened to impose additional retaliatory tariffs of 21 percent on the Ivory Coast, which would represent the highest level among West African countries.
Additionally, Canada, a key partner in cocoa processing, has also imposed retaliatory tariffs, presenting an extra challenge for companies in the U.S., including Hershey, which is the fourth-largest chocolate producer by revenue (£8.3 billion in 2023).
Cocoa troubles. Producers alter prices and compositions
Tariffs are not the only conundrum for sweet manufacturers. High cocoa prices stem from challenging weather conditions, crop diseases, and increasing demand. Towards the end of 2024 and the beginning of 2025, cocoa beans were being purchased at a record price of £9,800 per tonne on the exchanges.
