Tariffs shake up global spice market – Supply Chain Dive

Report on the Impact of U.S. Tariffs on the Global Spice Trade and Sustainable Development Goals

Executive Summary

Recent United States tariff policies, imposing duties of up to 50% on goods from countries without bilateral trade agreements, are causing significant disruption to the global spice market. With the U.S. importing over $2 billion in spices annually, these tariffs present considerable challenges for food manufacturers, supply chains, and consumers. This report analyzes the economic consequences of the tariffs and evaluates their adverse effects on the advancement of several key United Nations Sustainable Development Goals (SDGs), including those related to poverty, hunger, inequality, and responsible production.

Analysis of Economic and Supply Chain Disruptions

The implementation of a 10% baseline tariff, with scheduled increases to 50%, directly impacts the cost structure of the U.S. food industry. The American Spice Trade Association (ASTA) notes that these imported ingredients are vital for “hundreds of billions of pounds of food produced by American food manufacturers.”

A critical issue is the U.S. dependency on imports for a majority of spices, as most cannot be commercially cultivated domestically due to climatic constraints. Examples include:

• Black Pepper: Requires the hot, humid climates of India, Vietnam, and Brazil.
• Vanilla: Primarily sourced from Madagascar, demanding specific temperatures and labor-intensive hand-pollination.
• Cinnamon: Harvested from tree bark native to Sri Lanka and Southeast Asia, which cannot survive U.S. winters.

The financial burden is not distributed equally. While large corporations like McCormick project significant costs ($90 million annually) but can leverage sourcing changes to offset them, smaller enterprises are more vulnerable. The Spice House, a Midwest-based manufacturer, has reported that the tariffs create uncertainty and risk the viability of its domestic operations, which employ over 100 people.

Implications for Sustainable Development Goals (SDGs)

The tariff policy presents direct and indirect challenges to achieving global sustainability targets. The impacts are most pronounced across the following SDGs:

1. SDG 1 (No Poverty) & SDG 8 (Decent Work and Economic Growth): The tariffs threaten the economic stability of developing nations that are primary spice producers, such as India, Vietnam, and Madagascar. Disrupting these trade flows jeopardizes the livelihoods of countless smallholder farmers and workers who depend on the spice trade for income, undermining efforts to eradicate poverty and promote sustained, inclusive economic growth.
2. SDG 2 (Zero Hunger): By increasing the cost of essential food ingredients, the tariffs contribute to food price inflation. This can reduce the affordability and accessibility of food for consumers, particularly low-income households, thereby hindering progress toward ensuring access to safe, nutritious, and sufficient food for all.
3. SDG 10 (Reduced Inequalities): The policy exacerbates inequalities on two fronts. Globally, it places developing economies that rely on agricultural exports at a disadvantage. Domestically, it creates an uneven playing field where small businesses cannot absorb rising costs as effectively as large multinational corporations, widening the economic gap.
4. SDG 12 (Responsible Consumption and Production): Faced with higher costs for natural ingredients, food manufacturers may be forced to substitute them with cheaper, artificial flavoring alternatives. This trend would run counter to the goal of promoting sustainable production patterns and the consumer demand for natural products.
5. SDG 17 (Partnerships for the Goals): The imposition of unilateral tariffs on countries lacking bilateral agreements undermines the principles of global cooperation and multilateral trade partnerships. Such actions are contrary to the collaborative approach required to build a global partnership for sustainable development.

Industry Response and Recommendations

In response to these challenges, the American Spice Trade Association (ASTA) has formally requested tariff exemptions from the U.S. government. The primary argument is that tariffs on products that cannot be commercially grown in the U.S. do not protect or expand domestic production but instead pass costs directly to manufacturers and consumers, while negatively impacting global development efforts.

ASTA has submitted a priority list of spices for which tariff relief is considered essential. These include:

• Vanilla
• Cinnamon
• Cloves
• Cardamom
• Coriander
• Anise
• Nutmeg
• Ginger
• Saffron
• Dill
• Basil
• Sage
• Salt
• Black Pepper
• Mint leaves
• Thyme
• Bay leaves

SDGs Addressed in the Article

The article discusses issues related to international trade, economic impacts on businesses, and global supply chains, which connect to several Sustainable Development Goals (SDGs).

• SDG 8: Decent Work and Economic Growth

  The article highlights how tariffs threaten the economic viability of businesses in the spice industry, which in turn affects employment. It specifically mentions the risk to a small business, The Spice House, which “employs over 100 people,” and the significant financial burden on larger companies like McCormick. This directly relates to promoting sustained, inclusive, and sustainable economic growth and decent work.

• SDG 10: Reduced Inequalities

  The tariff policy creates inequality. It applies to “countries without bilateral trade agreements,” creating an uneven playing field in international trade. Furthermore, it exacerbates inequality between businesses, as the article notes that larger companies like McCormick can better “offset” the costs, while “Smaller spice makers, however, are less likely to be able to absorb the cost,” putting them at a competitive disadvantage.

• SDG 12: Responsible Consumption and Production

  The article touches upon sustainable production patterns by discussing the potential consequences of the tariffs. The increased cost of natural spices could “force companies to turn to artificial flavoring alternatives,” which undermines the push for natural ingredients and sustainable consumption. The entire discussion revolves around the global supply chain (“global nature of the spice trade”) for natural food products.

• SDG 17: Partnerships for the Goals

  This goal is relevant as the article’s central theme is a disruption of global trade partnerships. The imposition of unilateral tariffs runs counter to the goal of a “universal, rules-based, open, non-discriminatory and equitable multilateral trading system.” The actions of the American Spice Trade Association (ASTA) in writing to the administration and Congress also represent a form of partnership (industry and government) aimed at influencing policy for global trade.

Specific SDG Targets Identified

Based on the article’s content, several specific SDG targets can be identified.

• Target 8.3: Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises.

  The article directly connects to this target by describing how the tariff policy is “putting our small business at risk.” The case of The Spice House, a small manufacturer employing over 100 people, shows how the policy negatively impacts small enterprises and the decent jobs they create.

• Target 10.a: Implement the principle of special and differential treatment for developing and least-developed countries.

  The tariffs are imposed on countries without bilateral agreements. Many of the spice-producing nations mentioned, such as India, Vietnam, and Madagascar, are developing countries. The policy does not provide them with special or differential treatment; instead, it imposes high tariffs that hinder their trade, which is contrary to the spirit of this target.

• Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.

  The article implies a threat to this target by stating that high costs for natural spices (a natural resource) could lead companies to use “artificial flavoring alternatives.” This represents a shift away from the use of natural resources in food production due to economic pressures created by the tariffs.

• Target 17.11: Significantly increase the exports of developing countries.

  The tariffs are designed to increase the cost of goods imported into the U.S., which directly hinders the ability of developing countries like Vietnam, India, and Madagascar to export their primary products (spices). This policy works in direct opposition to the goal of increasing exports from developing nations.

Indicators for Measuring Progress

The article mentions or implies several indicators that can be used to measure progress toward the identified targets.

• Indicator for Target 8.3: Number of jobs in small enterprises.

  The article provides a specific number: The Spice House “employs over 100 people.” The viability of these jobs serves as a direct indicator of the policy’s impact on small business employment.

• Indicator for Target 10.a: Average tariffs faced by developing countries.

  The article explicitly states the tariff rates: “Tariffs as high as 50%” and a “10% baseline.” These figures are direct indicators of the trade barriers and lack of preferential treatment for exporting countries.

• Indicator for Target 12.2: Shift in material use in production.

  An implied indicator is the potential shift from natural to artificial ingredients. The article suggests this outcome by noting that tariffs could “force companies to turn to artificial flavoring alternatives.” Tracking the ratio of natural versus artificial flavorings in food products would measure this.

• Indicator for Target 17.11: Value of imports from developing countries.

  The article provides a baseline value: “The U.S. imported more than $2 billion of spices from more than 50 countries in 2024.” This figure can be used as an indicator to track whether the value of these imports (a proxy for developing country exports) increases or decreases as a result of the tariff policy.

Summary of SDGs, Targets, and Indicators

Source: supplychaindive.com