Coca-Cola, PepsiCo Reportedly Face Trump Tariff Turmoil Over Secret Formula Supply Chains

For decades, the two soda giants have produced the concentrate for their beverages in Ireland because of the country's low corporate tax rate. Now, there's a 10% import duty.

Stories of the sting from President Donald Trump's trade tariffs are now surfacing in unexpected — or at least previously overlooked — corners of the corporate economy.

PepsiCo (PEP) and Coca-Cola (KO) may now have to take a hard look at where they produce and how they export the secret-recipe concentrates that are the essence of their popular beverages, according to a Wall Street Journal report.

For decades, the two companies have produced the concentrate in Ireland because of the country's low corporate tax rate. With a 10% tariff on imports, their management might consider reorganizing.

The situation is particularly pinching for PepsiCo, as the concentrate for nearly all its U.S. sales of Pepsi and Mountain Dew come from Ireland, according to WSJ.

PepsiCo's U.S. market share has dropped sharply over the past two decades, and last year, Dr Pepper overtook it as the No. 2 soda. After years of prioritizing food and energy drinks, PepsiCo is working to revive soda sales, but new tariffs may complicate that effort.

PepsiCo also produces its concentrate formula in Texas, Uruguay, and Singapore.

Coca-Cola makes most of the concentrate for its American sodas in Atlanta and Puerto Rico, a U.S. territory, which means its drinks such as Coke and Sprite are less exposed to tariffs.

Coca-Cola and PepsiCo are also likely to be affected by the 25% tariff on aluminum imports imposed by the U.S. in March.

Coca-Cola imports some aluminum from Canada, and soda prices could rise due to the levy, Coke CEO James Quincey said in February.

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