Go to contents

Trump tariffs squeeze Pepsi as Cola rivalry heats up

Posted April. 22, 2025 08:17,   

Updated April. 22, 2025 08:17

Trump tariffs squeeze Pepsi as Cola rivalry heats up

U.S. President Donald Trump’s tariff policies are shaking up the U.S. soda market, with PepsiCo at a growing disadvantage against Coca-Cola. Because Pepsi’s cola concentrate is produced in Ireland—now subject to a 10% reciprocal tariff—the company’s cost structure is less competitive in the domestic market. Analysts say the impact could further erode Pepsi’s position, already trailing Dr Pepper in third place among U.S. carbonated beverage brands.

The Wall Street Journal reported Sunday that PepsiCo’s long-standing manufacturing strategy is now working against it. Since 1974, the company has operated a concentrate plant in Ireland to take advantage of low corporate tax rates. The concentrate is then shipped to the United States, where it is mixed with water, carbonation, and sweeteners to produce the final product.

However, Trump’s tariffs have turned that global supply chain into a liability. Nearly all of the Pepsi concentrate sold in the U.S. is imported from Ireland and thus subject to a 10% duty. Coca-Cola, meanwhile, has largely avoided the penalty by producing its domestic supply of concentrate in Georgia and Puerto Rico, even though it also has operations in Ireland.

The Trump administration’s 25% tariff on aluminum imports could also hit soda makers. According to CNN, Coca-Cola CEO James Quincey said the company sources some of its aluminum cans from Canada, raising the possibility of price hikes. He added that Coca-Cola is exploring alternatives such as plastic packaging or sourcing aluminum from within the U.S.


Ji-Sun Choi aurinko@donga.com