Campbell Soup executives warned of rising production costs during the company’s fiscal Q3 conference call Friday, directly attributing the expected cost increases on the Section 232 steel tariffs.
The tariffs were not blamed for the company’s posted loss of $393 million for its fiscal third quarter, but Campbell CEO Denise Morrison, who left the company effective immediately after the conference call, warned that profits would continue to decline between 5-6 percent for the remainder of the year.
“The issue is primarily one of cost inflation, and we’re seeing and expecting an acceleration on the rate of inflation across a number of ingredient and packaging items,” said Chief Financial Officer Anthony DiSilvestro on a call with analysts. “For example, we expect double-digit increases on steel and aluminum. A lot of that is driven or all of its driven by the impact of anticipated tariffs.”
US Department of Commerce Secretary Wilbur Ross specifically mentioned Campbell while defending the tariffs in March, arguing that the impact on companies such as Campbell would be minimal.
“I just bought a can of Campbell Soup today at the 7-Eleven,” Ross said at the time on a FOX Business segment, holding up the can on camera. “It was $1.99 for the can. There’s about 3 cents worth of tin plate steel in this can. So if it goes up 25 percent, that’s a tiny fraction of one penny. That’s not a noticeable thing.”
The Can Manufacturers Institute, a trade association, pushed back on Ross’s assertion, telling news media that a 1 cent tariff would amount to a $1.1 billion tax on consumers.