Economic Outlook Under a New Administration

When the new administration goes into action in 2025, change is the only certainty. In food and other industries, key questions arise around FDA, tariffs, transportation, and immigration. The road ahead is as foggy as it has ever been, but there are clues to help clear the haze.

Food & Drug Administration

Under President Biden’s term, the US Food & Drug Administration reorganized. The newly formed Human Foods Program oversees all activities related to food safety, and nutrition. The agency has become more transparent. In October 2024 FDA released its 2025 Deliverables, which include far-reaching goals to improve microbiological food safety, food chemical safety and nutrition.

All bets are off now that Robert F. Kennedy Jr. has been nominated to lead the Department of Health & Human Services, an agency that includes the FDA and CDC. The next step is confirmation by the majority Republican Senate.

If confirmed, the speed with which Kennedy will impose his controversial views is unknown. The organization he founded, Children’s Health Defense, reflects his anti-vaccine notions. He’s adamant about his distaste for the food industry. In his presidential campaign withdrawal speech, he discussed the causes of childhood and young adult health issues. “The worst is ultra-processed food,” he said. “About 70% of American children's diet is ultra-processed. That means industrial, manufactured in a factory. These foods consist primarily of processed sugar, ultra-processed grains, and seed oils.” Removing ultra-processed foods from schools is just one of his goals. Chemical additives are next on his agenda.

He maintained that the cigarette industry, which he said purchased all the big food companies in the 1970s and ’80s, deployed thousands of scientists to discover new chemicals to make foods more addictive. “And these ingredients didn't exist 100 years ago,” he continued. “Hundreds of these chemicals are now banned in Europe, but ubiquitous in American processed foods.”

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In a video released on September 25, 2024, JKF said, “Restaurants that serve contaminated food are fined or shut down. But when it's the government that approves the poisons in our food a few people get very, very rich and the toxins end up in every supermarket aisle.”

Standing before a kitchen counter adorned with Cheez-It, Doritos, Cap’n Crunch, Welch’s fruit Snacks, and other items, he called out the food color yellow #5 (tartrazine) naming foods in which it is found: popcorn, mac and cheese, fruit snacks, sports drinks like Gatorade, vitamin water, chicken broth, corn, pickles, mustard, and yogurt. “And so, of course, our kids get sick. I've been picking on tartrazine today, but that's just one of at least a hundred chemical poisons that our health agencies allow into our children's food. I can make a video just like this to talk about red 40, BHA, BHT, potassium bromate, chemical after chemical, and on and on and on.”

In an October 25 post on X, Kennedy advocated for raw milk, though CDC considers consumption of raw milk a public health concern. Pasteurization kills pathogens such as E. coli, Salmonella, and Listeria that are linked to foodborne illnesses. In a case reported in February 2024, more than 165 people, mostly children, became ill after consuming products from Raw Farm LLC.

Kennedy told NBC on November 6 that entire departments like the nutrition departments at FDA have to go. “They’re not doing their job. They’re not protecting our kids.”

And that may be just the beginning of disruptions the food industry might experience when Kennedy is confirmed.

Tariffs

As pointed out in a recent Powder & Bulk Solids article, Trump raised tariffs during his administration. Biden didn’t reduce or remove these tariffs, and in fact, added more hikes on goods from China. More tariffs were collected under the Biden administration than by Trump.

Now, it’s anybody’s guess exactly where the tariffs are going to go. “If Trump does what he says he is going to do, I expect sweeping tariffs across all sectors,” said Thom King, chief innovation officer and food scientist at Icon Foods. “It will likely be more pronounced in tech and electric vehicles where he indicated the sky is the limit on autos. As far as food ingredients go, there is a current 25% tariff on Chinese ingredients. I would expect this to go to 50% to 75% depending on the commodity.”

“In December an anti-dumping tariff goes into effect on erythritol,” he continued. “In conversations with our co-manufacturers, they have taken a massive hit with huge stockpiles of material that is not moving. My fear is that Chinese manufacturers will start dumping this material in the US, which will trigger Cargill to follow suit with Jungbunzlauer (a Swiss global producer of biodegradable ingredients of natural origin).

"This will drive the cost of erythritol up by at least 50%, probably more. This of course will increase manufacturers’ costs of goods sold, and this will trickle down to the consumer making inflation worse on some products which contain Chinese ingredients. We are watching this like a hawk. Savvy manufacturers should stock up to cover for 2025. We are encouraging our customers to hedge their ingredients by locking in positions past July 2025. This requires a lot of cash to hold this much material. But it will be worth it if the tariffs take raw materials up by 50% or more. The FED lowering prime helps with this.”

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A report from logistics company C.H. Robinson suggests the earliest time that new tariffs could be in effect is late February or early March. “With continued port labor uncertainty and the potential for increased tariffs in Q1, shippers should anticipate a strategic pull-forward of inventory out of Asia, which would impact both international and certain domestic freight markets (e.g., Southern California).”

Transportation

With an increase in tariffs, King foresees a pullback in imports. “There has been a steady drop in container pricing. By Q2 we project that container pricing will be very competitive and back below $3500. The only caveat to this will be a potential longshoreman strike since the master contract was extended until January 15, 2025.”

The Longshoremen's strike, he believes, should be on everyone’s radar. While a tentative agreement was reached, it only pushes back the possibility of another strike until January 15, 2025. If that occurs, ships won’t get unloaded.

The bright side of a Trump presidency may be reflected in domestic transportation. Trump has consistently advocated for an energy policy centered around domestic oil production. According to SFL Worldwide, “This emphasis on increasing oil output could drive down fuel prices, with analysts predicting oil prices could drop to as low as $40-$50 per barrel.” Lower oil prices reduce operational costs for the trucking industry and ultimately may relieve inflationary pressure on consumer goods.

Labor

Trump’s official website proposes to deliver a merit-based immigration system that protects American labor. Yet campaign rhetoric paints a harsh approach. “On day one, I will launch the largest deportation program in American history.” Appointed border czar, Thomas Homan, echoes the sentiment. “I will run the biggest deportation force this country has ever seen.” Priority is given to those who threaten public security, but Homan warns that everyone who entered this country illegally has committed a crime.

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To the extent that this will impact food labor is a concern. According to The Packer, 50% to 70% of farmworkers are undocumented. “Mass deportations would dramatically reduce the available workforce, potentially crippling agricultural production,” the writer said.

In a press release issued prior to the election, Cathy Burns, CEO of the International Fresh Produce Association, commented on the importance of agricultural labor while emphasizing the role of Congress. “The viability of many American growers is at risk, so Congress must finally act to meaningfully address the critical lack of on-farm labor that threatens our ability to meet consumer demand for fresh, nutritious food.”

“The produce sector relies on an affordable, stable workforce and is currently facing crippling workforce shortages and rising costs that routinely exceed crop values,” Burns said. “The H-2A program is the primary labor source for US produce growers, yet Congress is paralyzed by decades of inaction and has ignored the need for reforms to improve the program’s accessibility to producers and its reliability in securely vetting and protecting temporary foreign workers.”

Currently, the H-2A Visa Program provides the route for agricultural employers to temporarily fill jobs with foreign workers. The US Government Accountability Office reported from 2018-2023 the number of H-2A jobs and visa increased by over 50%. Application processing time is a drawback since it can take 27-29 days to process an application. If Trump’s administration can expedite electronic processing, disruptions can be minimized.

While we can see by on-air and digital media that things are up in the air yet about who else will hold a high-profile prole in the new administration, know that the food industry will surely change. Whether that is for the better