From booming production to rising costs, a look at how tariff turbulence may impact the industry. | World Business Chicago

06.11.2025

From booming production to rising costs, a look at how tariff turbulence may impact the industry.

From booming production to rising costs, a look at how tariff turbulence may impact the industry.

Chicago is the nation’s capital for food innovation and manufacturing—driven by strategic location, a skilled workforce, and fast-growing sub-industries. The region plays a critical role in U.S. economic output and industrial expansion.

However, the sector is under pressure due to an evolving tariff landscape. Recommended reading:

This week, Himashi Jayasundera, Research Manager at the WBC Research Center, led efforts with Bridget Harney, Sr. Regional Research Manager, to examine how these shifting trade policies are impacting Illinois’ food manufacturing ecosystem.

New and proposed tariffs are significantly increasing costs for Illinois-based food manufacturers. Inputs like packaging materials and specialty ingredients have become more expensive, forcing companies to either absorb the hit or raise consumer prices—contributing to higher costs at grocery stores. Meanwhile, retaliatory tariffs from key trade partners like Canada and Mexico threaten supply chains and could limit access to essential imports.

We see it coming—just look at the national forecasts:

  • As of May 2025, Yale University’s Budget Lab projects that tariffs could raise consumer prices by 1.73%.
  • This is equivalent to a loss of purchasing power of $2,800 for the average household.
  • The Budget Lab estimates that all 2025 tariffs disproportionately affect food prices, rising prices by 2.3%, with fresh produce prices increasing 3%.
  • Related commodities, including machinery and equipment, transport equipment, and other manufacturing goods, are expected to see price increases of 3% or more.
  • Further up the supply chain, crops are projected to see one of the largest price increases of nearly 12%.

Chicago and Illinois are particularly vulnerable, as the state’s food manufacturing sector is a net importer—relying heavily on ingredients and materials produced elsewhere to meet both consumer and industrial demand.

BY THE NUMBERS:

  • $ 11.4 billion food and agricultural total exports. (Despite the deficit, Illinois remains a national leader in food and agricultural exports, consistently ranking among the top states.)
  • $ 16.8 billion food and agricultural total imports. (High import value suggests Illinois food manufacturers depend on global sources for ingredients, packaging, and equipment. This resilience can expose the industry to global supply chain disruptions, price volatility, and trade policy risks.

 

The larger import and export values reflect Illinois’ deep integration into global food supply chains. Illinois is a major hub for both the import of raw materials, ingredients, and finished products, and the export of processed foods, leveraging its central location and transportation infrastructure.

Still, Chicago’s food manufacturing and production ecosystem remains strong. Its resilience is powered by a mix of established industry leaders, innovative startups, and a skilled workforce—fueling continued job creation and economic growth.

BY THE NUMBERS:

  • $1.41 billion of sales from food manufacturers are made in-region, i.e., we have a highly local supply chain; while 49.6% of purchases are made in-region as well.
  • Since 2021, there have been 58 food manufacturing Pro-Chicagoland Decisions. Combined, these projects have created nearly 40,000 jobs and brought earnings of over $3.2 billion. A few notable projects include the expansion of:
  • Mars—opened its $40 million innovation hub on Goose Island in 2022 creating 30 new jobs;
  • Red Bull—leased space in both Arlington Heights and Romeoville for a combined total of 127,900 square feet in 2024; and,
  • Ferrero—announced that in 2025, they’ll be investing $75 million in its Franklin Park plant creating 65 new jobs.
  • As of 2024, Chicagoland leads the nation in food manufacturing employment, with more than 68,000 people working in the industry.This strength is supported by a broad base of over 288k production workers in the region. The sector is also expanding: since 2019, Chicagoland has added over 12k new production jobs.
  • We have the nation’s largest output for food manufacturing, at $10.29 billion in 2024 which is a 5.4%growth from 2023.

This means more locally made foods on shelves, more jobs for Illinois families, and a thriving industry that’s outpacing much of the country.

The WBC Research Center is the anchor of World Business Chicago’s storytelling laboratory—curating and publishing original, data-driven content that informs, advises, and empowers Chicagoland’s business community. From economic forecasts to industry deep dives, the Research Center equips decision-makers with timely insights that shape strategy and spotlight Chicago’s competitive edge.

Explore real-time data, monthly economic dashboards, industry white papers, and more at worldbusinesschicago.com.

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