Tariffs and interest rates: What food and beverage businesses need to know

The risks food and beverage businesses must manage

Interest rate relief doesn’t erase the challenges of tariffs, trade disruption, and inflation. Margin compression remains one of the most pressing risks. Rising input costs can’t always be passed on to consumers, especially in price-sensitive categories where affordability dictates purchasing decisions.

Deal uncertainty is another reality. Even as capital becomes cheaper, tariff-related volatility can complicate mergers, acquisitions, and transaction pricing. Owners may hesitate to sell or expand, worried about overcommitting in an unstable environment. That hesitation, however, can mean missed opportunities if competitors move ahead more decisively.

Risk is therefore part of the equation. But businesses that approach it with planning and foresight can treat uncertainty as an opportunity to strengthen operations.

Turning challenges into opportunity

While uncertainty is a constant, it doesn’t have to mean things are completely out of your hands. Uncertainty can also serve as a catalyst for change. Here are a few strategies that can be effective in starting that change:

• Optimize your cost structure: Look beyond surface-level expense cuts to understand where tariffs or financing costs are squeezing margins. This may mean diversifying suppliers, renegotiating terms, or adopting technology to track and manage costs more precisely.
• Stress-test your financing: Lower rates make borrowing attractive, but modelling different interest rate scenarios helps avoid overexposure if conditions shift again.
• Revisit your supply chain: Tariffs are only one pressure point. Logistics costs, labour shortages, and reliability challenges all factor in. A supply chain review can highlight vulnerabilities and efficiency opportunities.
• Explore growth and consolidation: Private equity interest in resilient segments creates momentum. Well-prepared businesses with clear financials and forward-looking forecasts are best positioned to attract strong valuations or make strategic acquisitions.
• Plan for resilience, not reaction: Scenario planning that integrates tariffs, interest rates, and broader economic trends provides clarity. Businesses that build resilience in advance can pivot more quickly than competitors when the environment changes.

Where corporate finance adds value

Navigating these conditions requires more than instinct. Corporate finance advisory services help translate uncertainty into strategy. This includes:

• Valuation: Understanding what your business is worth under current conditions, and how tariffs or fluctuations in financing conditions influence that value.
• Structuring: Designing deals, partnerships, or investments to protect your interests while maximizing flexibility.
• Financing: Identifying and securing the right mix of debt and equity to pursue growth while managing risk.
• Risk management: Stress-testing scenarios and developing strategies to protect margins under different tariff or rate conditions.
• Trade strategy: Assessing where tariff exposure creates risk and where supply chains can be optimized.

Building resilience

The path forward for food and beverage businesses will not be defined by stability. Tariffs are unlikely to disappear, and interest rates may not stay low indefinitely. But these conditions don’t have to be limiting. They can also serve as a prompt to act with foresight and discipline.

Effectiveness often comes from preparing in advance, rather than simply reacting when conditions shift. This means recognizing where tariffs affect your operations most, identifying how lower rates can support reinvestment, and ensuring your financial models account for volatility. Building this kind of resilience requires planning, but it also creates freedom. Businesses that anticipate different scenarios can move faster when opportunities arise, while competitors are still weighing their options.

One area to consider is supply chain strategy. For many food and beverage businesses, tariffs are just one variable in a complex web of inputs, logistics, and international relationships. Reviewing these factors holistically helps identify where efficiencies can be gained and where vulnerabilities remain. Pairing these reviews with robust financial planning ensures that any changes in trade conditions can be addressed quickly and effectively.

Preparing for what’s next

Financing is another critical lens. With borrowing costs lower than they have been in years, now may be the right time to secure capital for expansion, modernization, or acquisition. This is where stress-testing scenarios can help avoid overexposure if rates rise again. The key is to take advantage of favourable conditions with the understanding they will eventually change.

Corporate Finance advisory services can add clarity here. Valuation, structuring, and financing become more complex in uncertain times, and having expert guidance helps transform unpredictability into strategy. Leaders who make use of this kind of insight are better equipped to balance caution with opportunity.

As you look ahead, consider whether your business is prepared to navigate tariffs and interest rates not just as challenges but as signals for where to focus strategy. Those who plan today will be positioned not only to withstand uncertainty but to thrive despite it.