Should You Adjust Your Pricing Strategy Amid Rising Tariffs?

Global food prices are up 7.5% year-over-year, with key categories like cereals, meat, and dairy facing the most pressure due to rising tariffs, droughts, and ongoing supply delays.

Tariffs alone have pushed the cost of European dairy imports up by over 11%.

Meat prices have risen with feed disruptions, while corn and wheat futures continue to climb, increasing manufacturing costs for everything from cereal to snack bars.

For CPG brands, this isn’t a temporary spike—it’s structural, and the tariff impact is disrupting the way core portfolios are costed and priced.

Manufacturers can no longer rely on quarterly price adjustments or last year’s forecasts.

Margins are at risk, and a delayed reaction means lost revenue.

It’s time to rethink how CPG pricing models work under pressure.

This means going beyond just raising prices—it’s about flexibility, real-time intelligence, and understanding how to communicate value without alienating partners.

Understanding the tariff impact on global food prices

Cereal grains like corn and wheat, foundational to hundreds of SKUs, are exposed to global trade dynamics.

North America faces ripple effects from Brazil’s reduced exports and trade restrictions with China.

Dairy isn’t spared either—European tariffs have pushed butter, cream, and cheese prices higher, eating into margins on everything from sauces to frozen foods.

Meat processors report that transport delays and input costs are distorting production timelines.

This is not a pricing issue in isolation—it’s a food supply chain problem that needs a strategic pricing response.

The commodity-driven price changes we’re seeing are not linear.

A single change in tariff policy or container cost can reset your baseline.

Which is why pricing needs to be an active process, not a quarterly check-in.

Why legacy pricing models can’t handle today’s market

Too many teams still rely on fixed pricing structures that assume cost inputs are stable.

They’re not. And in periods of volatility, rigid CPG pricing models break down fast.

Static forecasts don’t account for fast-moving tariff shifts or surprise export restrictions.

The result? Pricing strategy for manufacturers that looks good in planning decks but collapses on the ground.

Worse, sticking to outdated models invites pricing inertia. Teams wait until a margin crisis is unavoidable. By then, it’s too late to recover.

This is especially dangerous during periods of supply chain disruption, which CPG leaders are facing globally.

When upstream cost inputs change daily, legacy systems only offer lagging indicators.

Want to learn more about pricing strategy for your business? Our inflation and tariffs guide has some great insights.

Building a dynamic pricing strategy for CPG success

Manufacturers are now segmenting pricing strategies by region, sensitivity, and consumer elasticity.

For example, some geographies can absorb higher dairy prices with minimal volume loss, while others require aggressive promotional balancing.

This is where a flexible pricing strategy for manufacturers becomes critical.

Promotions, distribution incentives, and pack size modifications are all tools that need to be used in coordination.

Real-time elasticity models can guide how you spend on promotions, where to pass cost increases, and where to delay pricing changes in favor of short-term loyalty.

But the biggest opportunity lies in rethinking how to price “premium” during a time when everything is expensive.

One powerful strategy? Shift the perception of value. Consider the Mushroom Truffle Risotto —rich, creamy, and indulgent, but made from affordable ingredients like arborio rice, mushrooms, and pantry staples, with just a touch of truffle oil.

This kind of product format is an example of how CPGs can make luxury accessible and market it that way.

Consumers are still willing to pay more for perceived indulgence, even during inflation.

The trick is to offer a premium experience without premium costs.

Brands should take inspiration from this dish: build products that look and feel elevated, but are engineered with price efficiency in mind.

A gourmet pasta with a flavored oil finish, a snack line using seasonal vegetable powders, or even upscale frozen meals can be positioned as affordable luxuries.

Done right, this isn’t just a recipe—it’s a pricing strategy. The perceived value of “truffle” or “garlic crumbs” does more work than the cost of those ingredients.

Value perception gives you room to price more dynamically.

The AI advantage: predictive pricing in action

AI-powered models are enabling real-time detection of margin pressure.

Instead of relying on spreadsheets and quarterly retros, pricing strategists can now monitor feed costs, tariff changes, and promotional effectiveness live.

This allows manufacturers to act fast and avoid margin erosion before it shows up in the financials.

Some teams are even automating the pricing response loop, flagging early threats and pushing updates to distributor systems within days.

For volatile categories like dairy or meat, this kind of speed protects revenue without undermining partner confidence.

Predictive pricing helps you stay ahead of commodity-driven price changes and reduces the impact of supply chain disruptions that CPG companies can’t fully control.

Action plan: roll out price changes without losing buyers

To avoid backlash, pricing changes must be phased, modeled, and clearly communicated.

AI tools can simulate how different distributors or retail partners will respond based on historic patterns and channel sensitivity.

That insight allows teams to test changes in low-risk segments first and scale what works.

According to Tastewise, ‘frozen’ is what consumers most associate with “Inflation Shifts” among all “preparation methods”, mentioned 2.15 times more than average.

That means consumers are cooking at home more and need affordable and reliable products. 

But it’s not just about numbers. Communication matters. CPGs must frame price changes around product improvements, reliability of supply, and access to trending formats.

It’s not “this costs more”—it’s “this delivers more.” That’s the mindset shift that protects partner relationships.

FAQs

How are tariffs currently affecting food prices globally?

Tariffs are raising import costs for cereals, dairy, and meat, leading to higher production costs across categories.

These pressures impact unit economics and force manufacturers to revise prices faster and more often.

What makes AI more effective than historical data in pricing decisions?

AI uses real-time signals—trade policy, shipping delays, promotional effectiveness—while historical data lags.

That makes it a better tool to manage global food prices and shifting demand.

How can manufacturers avoid backlash from partners when adjusting prices?

Model distributor reactions, phase rollouts, and clearly communicate product value.

Use real-time data to adjust based on what’s working, not just planned pricing calendars.