McCormick & Co. Revises 2025 Tariff Impact Forecast Significantly

McCormick & Co. Increases Tariff Projections for 2025 In a recent earnings call, McCormick & Co. announced a significant adjustment to its tariff impact forecast for 2025, raising the estimate from $90 million to approximately $140 million. CFO Marcos Gabriel elaborated on this increase, attributing the higher costs to both existing and newly implemented tariffs as of August, with the latter contributing nearly two-thirds of the upcoming financial impact. Gabriel stated, “As we look ahead to 2026, we plan to offset as much of the incremental impact as we can with productivity savings across the P&L, alternative sourcing, supply chain initiatives and, of course, leverage our revenue management capabilities, including pricing.” This indicates that the company is actively seeking strategies to mitigate the financial pressures from tariffs. Since April, McCormick has been working to navigate the complex landscape of tariffs put in place by the Trump administration, which affected imports from numerous countries. The company previously indicated challenges in reducing these levies, as many essential raw materials have become scarce in the U.S. market. McCormick offers a diverse selection of around 17,000 ingredients across 90 different markets worldwide. To combat the effects of tariffs this year, McCormick implemented price increases and adjusted its procurement strategy to source materials from countries with lower tariffs. This strategy is expected to continue into 2026, as the company looks for additional productivity savings. President and CEO Brendan Foley highlighted, “Our global manufacturing location strategy, resilient supply chain, global sourcing capabilities and collaborative efforts across the organization continue to be competitive advantages, enabling us to mitigate the impact of tariff and tariff-related costs and maintain business momentum.” This demonstrates the firm's commitment to finding ways to maintain its competitive edge, even amidst rapidly changing market conditions. In addition to rising tariffs, McCormick has faced escalating commodity prices, particularly in the first half of 2025, which intensified through the third quarter. Gabriel noted, “It accelerated, and we saw more inflation come through this quarter than we expected.” The uncertainty surrounding tariffs has also led suppliers to become cautious, with many choosing to adopt a wait-and-see approach regarding market movements. Foley commented on the slower dynamics of supply and demand caused by this uncertainty, suggesting that these factors have been influencing operations since the second quarter of this year. However, he also observed that suppliers are beginning to pass on their tariff-related impacts as conditions evolve. Amid these challenges, McCormick has expanded its distribution points in the Americas for its product ranges, including spices, seasonings, recipe mixes, hot sauce, and mustard. The company is also enhancing its presence in fast-growing channels like e-commerce, positioning itself for future growth opportunities.