PepsiCo Faces Greater Strain Than Coca-Cola from U.S. Tariffs on Chinese Imports
New U.S. tariffs targeting Chinese imports are poised to hit PepsiCo harder than rival Coca-Cola, according to recent company disclosures. With the Biden administration reinstating and expanding duties on key materials from China, the beverage and snack giant could see increased pressure across its packaging and manufacturing supply chains.
Both PepsiCo and Coca-Cola source aluminum cans and other key inputs from abroad, but filings reveal stark differences in how exposed each company is to Chinese imports. PepsiCo stated that it expects “significant impacts” from new and existing tariffs resulting from U.S.-China trade tensions. In contrast, Coca-Cola reported that the impact to its operations would be limited.
The new tariffs, part of a broader trade enforcement strategy announced by the U.S. Trade Representative, include higher duties on Chinese-made steel, aluminum, electric vehicles, batteries, and semiconductors. These measures aim to address what the administration calls unfair trade practices by China, but also raise new cost concerns for multinationals sourcing materials globally.
Analysts suggest PepsiCo’s varied product portfolio—including its substantial Frito-Lay snack business and wider packaging needs—may explain its greater vulnerability. The company’s reliance on imported equipment and aluminum-based packaging could drive up production costs more significantly than Coca-Cola, which has a tighter focus on beverage manufacturing.
Rising input costs come at a time when both companies are already navigating shifting consumer demand and inflationary pressures. PepsiCo, which increased prices across its portfolio in recent years, may be forced to reassess its pricing strategy if tariff-driven expenses escalate further.
Despite the tariff headwinds, both beverage leaders maintain strong positions in the U.S. market. However, the disparity in exposure underscores the growing importance of supply chain agility. FMCG leaders will be watching closely how multinationals manage tariff-related risks while preserving cost efficiencies and maintaining consumer price stability.
For PepsiCo, the renewed trade barriers could require a strategic recalibration of its sourcing and logistics operations, especially in packaging and manufacturing inputs. Coca-Cola, while not immune, appears better shielded—at least for now—from the immediate financial repercussions of the latest U.S.-China trade actions.