A sweet advantage: U.S tariffs give Canadian chocolatiers opportunity

U.S. tariffs on cocoa creates more opportunity for chocolate makers in Canada.

U.S. tariffs on cocoa imports are creating new business opportunities for Canadian chocolate makers.

The chocolatiers are increasingly fielding requests from across the border as American manufacturers face rising costs.

Tarek Hadhad, CEO of Peace by Chocolate in Nova Scotia, says his company has seen a wave of interest from American firms looking to outsource production.

“Basically, what is happening right now is the tariffs imposed by the U.S. administration, they are increasing the cost of importing cocoa into the United States,” said Hadhad. “We are seeing all kinds of U.S. manufacturing companies reaching out to us here in Canada and asking us if we can produce products for them, which actually never happened before.”

Cocao remains tariff-exempt under the United States-Mexico-Canada Agreement (USMCA), meaning Canadian companies can continue sourcing raw ingredients and exporting chocolate to the U.S. without added duties.

Meanwhile, American producers are dealing with new tariffs that could rise as high as 35 per cent by August.

“Many firms down the border are basically struggling to make sure that they are absorbing all the extra costs on producing the product in the U.S.,” said Hadhad. “Which is certainly the opposite of the intention behind these tariffs in the first place.”

Hadhad said the company stopped tracking U.S. inquiries after receiving too many to count.

Although Peace by Chocolate does not have the current capacity to fulfill every request, Hadhad said the company is still moving forward with its export strategy. “Our goal at the end of the day is to certainly grow our operations right here in Canada, not only is the target the U.S., the target is the whole world.”

Hadhad added that Canada’s chocolate exports to the U.S. are far more significant than many assume.

“It’s not Belgium, actually, the Canadian size of exports of chocolate to the U.S. is almost five to six times the size of exports of Belgium to the U.S.,” said Hadhad. “We are around $2.7 billion of exports of chocolate made in Canada to the United States.”

Smaller chocolatiers like Whim in Halifax say they’re still figuring out how to scale up and ship efficiently.

“We don’t export a lot of our chocolate to the United States, but Canada itself does,” said co-owner Marshall Parker. “Canada is, I think, one of the largest sellers of chocolate into the United States. They’re actually at a competitive advantage compared to the U.S. chocolate makers.”

Whim moved its operations from Boston to Halifax two years ago, and Parker said the idea of expanding again is tempting, especially with former clients in Massachusetts reaching out.

“We did have a clientele in Boston who do miss our chocolate,” he said. “We’d love to do that, but we really need to navigate the sort of shipping into the United States, and we haven’t really quite got there yet.”

Shipping remains one of the biggest hurdles, explained Parker, especially during the summer months.

“It’s a little bit tricky to send chocolate in the summertime, because you have to worry about it melting,” he said. “Usually what we do is try and calculate what is the cost of the shipping going to be, and are you willing to spend that before we actually send it.”

Although shipping and logistics remain a challenge, Parker acknowledges the opportunity created by U.S. tariffs.

“Does it benefit us that chocolate is being sent into the United States? Yes absolutely,” he said. “But are we going to price our Mars or Hershey? I doubt it. I’m sure they’re going to figure out a way to handle this.”

At Peace by Chocolate, Hadhad said the company is still focused on growing its operations in Nova Scotia, but that international demand, including from countries beyond U.S. is rising.

Despite the high global cocoa prices, he’s optimistic.

“We are seeing the trend go in the better direction than we had even imagined in the beginning of this year, which is really good for our industry,” he said.

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