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- New tariffs shake the pet market - who’s set to gain or lose?
New tariffs shake the pet market - who’s set to gain or lose?
Thinner margins, sourcing headaches and higher consumer prices
IN THE NEWS
🇬🇧 3i Group stops sale of pet food manufacturer MPM UK-based private equity firm 3i Group has reportedly halted the sale of pet food company MPM as it weighs up the impact of new U.S. tariffs. Last week, the United States imposed a 36% tariff on exports from Thailand, where MPM sources ingredients.
🇨🇦 Price Valu price cuts Canada-based specialty pet food retailer Pet Valu has lowered prices of its premium pet food Made in Canada Performatrin Prime® dry dog and cat food by up to 15%. Last month, U.S.-imposed 25% tariffs on Canadian goods came into effect.
🇬🇧 Pets Choice acquires Pettex Ltd UK-based Pets Choice has agreed to acquire cat litter brand Pettex for an undisclosed sum. The move follows several recent brand acquisitions by Pet Choice, including Otodex, HOWND and Vet’s Kitchen. Other Pet Choice brands include Webbox, Bob Martin, Felight, Tastybone and B-Calm.
TOP STORY
What do new tariffs mean for the U.S. pet industry?
On April 2, the United States imposed new tariffs on imported goods from virtually every country in the world. This decision has already significantly impacted global stock markets, and is expected to affect industries that depend on global supply chains, including the pet industry.
The US pet industry is the world’s largest, with sales of US$150.6 billion in 2024, according to American Pet Products Association (APPA). Of this, US$65.8 billion came from sales of pet food and treats, US$39.8 billion from veterinary care and products, and US$33.3 billion from supplies, live animals and over-the-counter medicine.
However, pet food and treats, veterinary equipment and supplies and pet toys are particularly reliant on the global supply chain:
Pet food and treats: Despite its domestic strength, the U.S. pet food market industry is heavily reliant on imports. In 2024, the U.S. imported around US$2.1 billion in dog and cat food, with top suppliers including Canada, Thailand, and China. For example, some U.S. brands source premium ingredients from Canada’s small local farmers that meet specific quality standards, e.g. hormone and antibiotic-free.
Of the U.S.’s pet food imports last year, China alone accounted for US$296 million, according to Pet Food Institute. The White House imposed a further 34% tariff on Chinese imports on April 2, but this may increase to a combined tariff of over 100%.
Veterinary equipment and supplies: Essential veterinary tools and supplies, including syringes, surgical gloves, X-ray machines, and ultrasound equipment, are often imported.
Pet Accessories: A significant portion of pet accessories, such as toys, leashes, and bedding, are manufactured in China.
Likely consequences of the latest round of tariffs:
Tighter margins, slower growth
Overall, tariffs are expected to increase U.S. manufacturers’ production costs and narrow profit margins.
In terms of pet food, many U.S. pet food ingredients, such as meats, grains, and vegetables, additives and supplements, are imported from Canada, Thailand, or China. That said, several brands such as Blue Buffalo and The Farmer’s Dog manufacture or source from within the U.S., which may insulate them somewhat.
Pet accessories and other finished goods, however, are typically mostly manufactured overseas (e.g. China), where production costs are lower and manufacturing capacity is greater than the United States. U.S. pet brands that depend on cheaper manufacturing overseas will be forced to decide how much of the costs to pass on to pet owners.
Meanwhile, reciprocal tariffs imposed by China may reduce sales for U.S. pet brands. According to Pet Food Institute, China was a top importer of U.S. pet food exports at US$296 million last year, up 15% year on year.
“Retaliatory tariffs on U.S. animal-based ingredients or finished pet food products could create additional cost burdens for manufacturers, potentially reducing competitiveness in key international markets,” Pet Food Institute Manager of International Affairs Dana Waters wrote in an opinion piece last month.
U.S. pet food brands may localise sourcing and production
To ease costs, U.S. pet food brands are expected to source ingredients domestically wherever possible. Many U.S. brands already prioritise local sourcing, including: Blue Buffalo, Open Farm, Diamond Pet Foods, Stella & Chewy's, Fromm Family Pet Food, and JustFoodForDogs and The Farmer’s Dog.
That said, many premium pet food brands such as companies like Farmina, Go! Solutions and Now Fresh include raw materials or special components are not sufficiently available domestically (or within any one country), which raises the likelihood of ingredient substitutions, potentially leading to compromises on pet food quality.
In Canada, we're able to get product from small local farmers, product that is hormone and antibiotic free, GMO free, and even Glyphosate safe, more commonly known as the weed killer Roundup, free. Here in the U.S., those standards don't exist.”
In terms of manufacturing, it remains to be seen whether the tariffs will spur an increase in U.S.-based pet food manufacturing capacity or jobs. Over the past two decades, the U.S. pet food industry has already undergone significant consolidation and expansion.
For example, major players like Mars, Nestlé Purina, Merrick Pet Care and Diamond Pet Foods have already expanded their U.S. manufacturing bases through acquisitions and investments in new facilities.
Emerging brands like Freshpet have alo introduced new product segments, leading to the establishment of dedicated manufacturing facilities. (Production data and production capacity figures are not publicly available).
Small U.S. pet businesses more exposed
While the U.S. pet industry is dominated by large conglomerates such as Mars and Nestle, small and medium-sized enterprises (often family-run, specialty brands) tend to drive innovation in higher-end niches such as organic and allergen-free products.
However, while large corporations may be able to withstand the impact of higher operating costs, smaller companies - the Mom n’ Pop pet companies - may face existential risks.
Small U.S. pet business may face a greater existential threat than large corporations.
4. Higher prices and greater financial pressure for consumers
Last but definitely not least: Tariffs and higher prices are ultimately going to impact pet owners, i.e. the consumers. According to online pet care marketplace Rover: “On the heels of ongoing inflation and newly enacted tariffs, prices of pet goods and services continue to rise in 2025.”
This includes a forecasted:
85% rise in the cost of pet treats;
20% rise in the cost of grooming supplies;
11% rise in veterinary fees; and
183% rise in pet cleaning supplies costs.
Tellingly, Rover found that more than a quarter (28%) of pet parents worry that they won’t be able to afford essentials like pet food, and half (52%) worry that tariffs will further increase the cost of having a pet.
That said, demand for pet essentials is expected to prove relatively inelastic, as pets are increasingly seen as family members. Rover found that one in three (34%) of pet owners said pet spending was one of the last things they would cut as a result of financial strain.
Nevertheless, for lower-income households, higher prices may well lead to heartbreaking decisions, such as pet relinquishment, abandonment or delays in veterinary care.
“Tariffs are a tax paid by the U.S. importer that will be passed along to the end consumer. Tariffs will not be paid by foreign countries or suppliers.”
The future is uncertain
As the consequences of the new tariffs continue swiftly to unfold, the U.S. pet industry is expected to have to adapt in real time. However, if there’s anything the business world does not appreciate, it’s uncertainty.
Unfortunately, uncertainty is expected to remain for the forseeable future.
Imposing tariffs on Canada will negatively impact manufacturers’ competitiveness and ultimately impede the growth of the pet care community.”
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