The Hidden Cost of Tariffs: How Trade Policy Is Stirring Up the Flavours & Fragrances Sector

As Trump and his policies take centre stage once again, there is one sector that seldom captures headlines yet contributes significantly to consumer value: the flavours and fragrances industry.

With Trump re-entering the political spotlight and doubling down on his commitment to impose new and expanded tariffs on a wide range of imports, there’s rising concern - not just among economists. For those of us immersed in the F&F world, the implications are very real, very complex and increasingly hard to ignore.

A Fragile Global Web

The reality is simple: the flavours and fragrances industry is inherently global. Many of the most prized ingredients used to create beloved American products, from air fresheners to fine fragrances, and sports nutrition shakes to doughnuts, are not homegrown. They are harvested, cultivated and refined in every corner of the world.

Madagascar’s vanilla. Indian jasmine. Indonesian patchouli. West African shea. Brazilian tonka bean. Tunisian neroli. Each of these ingredients travels thousands of miles to reach US manufacturers, forming the foundation of formulas that define everything from a luxury candle to a heritage soda brand.

Tariffs, then, are not a distant diplomatic issue. They’re a direct hit to the heart of this industry.

Costs, Complexity, and Compromise

For American F&F companies - especially SMEs and mid-sized producers - tariffs introduce not just increased cost, but increased uncertainty. It’s not just about price; it's about planning. Companies are suddenly forced to forecast costs on ingredients that may swing wildly depending on shifting political tides. This threatens everything from R&D timelines to client pricing strategies, especially as lead times on most projects average out at 12 months.

Larger multinationals may absorb the blow temporarily or reroute supply chains, but even they aren't immune to delays, price hikes or quality compromises. After all, many of these raw materials are terroir specific. You simply can’t source true Tahitian vanilla from Texas. While niche crops of vanilla are being cultivated in places like Hawaii and Florida, the reality is that the US remains the world’s number one importer of vanilla. It’s a cornerstone of American culinary culture, from the humble vanilla ice cream to the classic apple pie, and current domestic production levels are nowhere near enough to sustain national demand.

In a sector where nuance and precision matter, where the balance of a single note can define a brand, the risk is not just commercial. It's creative.

A Knock-On Effect

The impact ripples far beyond sourcing departments. Innovation slows. Formulators get boxed in. Marketing teams must navigate reformulations and potential consumer backlash. Companies facing increased tariff exposure may also find themselves unable to justify expanding critical roles or filling talent gaps. This leads to higher hidden costs from empty seats, underpowered teams and lost productivity, not to mention the missed opportunity to reinvest profit into areas like R&D or innovation.

There’s also a sustainability question. Many global suppliers in the F&F chain are family-run operations or cooperatives. Tariff-induced disruption could lead buyers to cut ties, destabilising local economies, undermining decades of ethical sourcing work, and leaving a vacuum that’s hard to fill.

What Comes Next?

It would be simplistic to argue that all tariffs are bad, or that reshoring efforts have no merit. Every country has a right to protect its economic interests. Tariffs can help bolster domestic industries, encourage local manufacturing, and reduce reliance on volatile international markets. For example, sectors such as steel, textiles and certain categories of electronics have historically benefitted from protective measures, allowing companies to invest in local infrastructure and preserve jobs. However, when it comes to the flavour and fragrance space, it’s essential that policymakers understand the finely tuned global ecosystem this industry relies upon.

There is no quick fix. No plug-and-play domestic alternative for some of nature’s most prized essences.

Procurement and product development teams need a seat at the strategic table. Supply chain diversification must be pursued with pragmatism, not panic. And executives would do well to double down on building strong partnerships, both locally and globally, that can withstand future economic shocks.

At its core, this industry is about connection: between raw material and maker, product and person, brand and emotion.

Let’s hope future policies reflect that same spirit of collaboration.