President Donald Trump, a known Coca-Cola enthusiast who reportedly installed a button to order Diet Coke in the Oval Office, has imposed tariffs that could raise the cost of Pepsi. According to The Wall Street Journal, PepsiCo—which produces Pepsi, Doritos and Cheetos—sources nearly all of its US soda concentrate from Ireland, unlike its rival Coca-Cola. As a result, the company no longer expects earnings to rise this year.
Rising supply-chain costs due to the tariffs, combined with a drop in consumer confidence over inflation fears and Trump’s trade war, are behind the weaker earnings projection. PepsiCo executives are working to mitigate the rising costs, but details remain unclear.
Coca-Cola could also be affected by Trump’s tariffs on aluminium, which raise the cost of soda cans. However, CEO James Quincy said the company will likely shift to more plastic packaging to reduce tariff expenses, the Journal reported.
Trump announced sweeping tariffs earlier this month, calling it “Liberation Day” for the US. He imposed 10 percent tariffs on goods from nearly every country, with additional levies depending on trade relationships. Days later, he issued a 90-day pause but maintained the 10 percent baseline, along with tariffs on cars, steel, and aluminium, and raised tariffs on Chinese goods to 145 percent. China retaliated with 125 percent tariffs on US goods.
Treasury Secretary Scott Bessent said Tuesday that there will likely be a de-escalation of trade tensions with China. However, experts doubt that comprehensive trade deals can be reached with 90 countries within 90 days, as Trump has suggested. “There’s no way during this timeframe we’re doing a comprehensive agreement with any of these countries,” said Wendy Cutler, a former US Trade Representative negotiator.
A CBS News/YouGov poll earlier this month showed Trump’s economic approval rating dropping four points from March, with 60 percent of respondents disapproving of his tariffs.
