The recent implementation of a 25% tariff on food products entering the U.S. from Mexico and Canada creates more than just economic ripples—it threatens fundamental aspects of our food safety and quality systems. At Culture Advisory Group, we are concerned about the cascading effects these tariffs will have throughout our supply chains.

The Ripple Effect of Shifting Supply Chains

When tariffs hit, supply chains don’t simply absorb the costs—they transform. Many U.S. and Canadian food companies will predictably shift away from now-expensive imports and focus on domestic suppliers. This shift creates a challenging dynamic: domestic producers may suddenly face demand surges that outpace their existing production capacities and food safety infrastructure.

Think about what happens when a processing facility designed to handle X volume suddenly needs to process 2X or 3X that amount:

• Production pressures increase faster than safety systems can adapt
• Rapid workforce expansion outpaces proper training
• Quality assurance programs become stretched beyond their design capacity

Companies expanding domestic production to compensate for lost imports need to clearly identify risks, conduct thorough assessments and be able to manage those risks, before increasing capacity. Without this crucial step, known hazards may be compromised under accelerated production schedules.

The Shadow Economy of High-Value Foods

The economics of importing high-value foods like avocados, mangoes, premium meats, and specialty cheeses fundamentally changes under these new tariffs. When legitimate import channels become prohibitively expensive, we will inevitably see an increase in the emergence of sophisticated black market operations targeting food supply chains.

These shadow operations introduce unique food safety risks:

• Products transported without proper temperature monitoring
• Falsified traceability documentation that eliminates recall capabilities
• Multiple intermediaries obscuring product origins.

 

The Threat of Economically Motivated Adulteration

Perhaps the most immediate risk in this environment is product substitution—a classic form of economically motivated adulteration (EMA). When high-value ingredients face substantial tariff increases, the temptation grows to substitute lower-value alternatives without disclosure.

We might soon see:

• Conventional produce falsely labeled as organic to command premium pricing that offsets tariff costs
• Increase in intentional substitution and adulteration of ingredients
• Expensive oils diluted with cheaper alternatives while maintaining premium labeling
• Country-of-origin fraud to evade tariff requirements.

Now is the time if any, for food companies to enhance their receiving processes to identify potentially diverted or adulterated products. This means implementing stronger documentation verification, more rigorous supplier approval processes, and increasing laboratory testing to verify product authenticity and safety.

The Hidden Costs of Efficiency Measures

Companies facing margin compression commonly target operational efficiency measures that inadvertently compromise food safety and quality systems:

• Extended production runs between sanitation cycles allow biofilm formation and harborage point development
• Reduced preventive maintenance increases equipment failure risks during production
• Reformulation to extend shelf-life requires additional validation that may be rushed or inadequate
• Lack of employee training may result in a higher risk of product failure or recall

Long-Term Restructuring of North American Food Trade

The Canadian supply chain realignment may represent more than a temporary adaptation —  it could reflect a fundamental restructuring of North American food trade with persistent effects even if tariffs are eventually removed. New supplier relationships will need to be established, requiring holistic assessments of food safety schemes with deeper verification of the individual programs, which form part of identifying, approving, onboarding and managing new suppliers.

Preparing for These Challenges

Companies should implement a structured risk-based optimization approach that includes:

1. Conducting systematic vulnerability assessments of supply chains to identify specific points where tariff pressures may have created new food safety risks
2. Developing enhanced screening and verification processes for rapidly onboarded new suppliers
3. Revalidating critical control points under new operating conditions and pressures
4. Implementing identity, purity and consistency testing programs for high-risk imported ingredients/products potentially subject to black market diversion

The Path Forward

Navigating the complex intersection of international trade policy and food safety requires specialized expertise that combines regulatory knowledge, technical assessment capabilities, risk optimization and strategic planning. In these uncertain times, redoubling efforts to authenticate safe, high-quality, unadulterated products is not just good business — it’s essential to maintaining consumer trust in our food system.  At Culture Advisory Group we have the expertise and resources needed to help adapt at these uncertain times. Reach out to bdooley@cultureadvisorygroup.com to get help.