The sales disruption shows how the tariff war escalated by U.S. President Donald Trump is upending global trade and forcing changes at a prominent food company that pays U.S. farmers to raise hogs that are slaughtered for meat.

Why it matters: China is also a major market for Canadian pork.

China increased its levies on imports of U.S. goods this month, hitting back at Trump’s decision to single out the world’s No. 2 economy for higher duties.

Beijing’s additional tariffs pushed China’s effective duty rate on U.S. pork to 172 per cent, according to industry data.

“With China no longer essentially being available, we really had to pivot our business,” Smithfield CEO Shane Smith said on a quarterly earnings call.

Smithfield posted a 9.5 per cent rise in total sales to $3.77 billion (C$5.22 billion) in the first quarter that ended on March 30, above analysts’ expectations for $3.62 billion, according to LSEG data. Shares jumped six per cent.

China represents about three per cent of Smithfield’s revenue, Smith said. The company has said it ships variety meat to China, such as pig stomachs, hearts and heads that U.S. consumers generally do not eat.

Before the trade war escalated, Smith said in March that Smithfield believed China would still be the best market for variety meat with increased tariffs.

“While it’s important, we do believe we have other options,” he said on Tuesday. “We’re able to ebb and flow with different markets.”

Trump has repeatedly urged Chinese President Xi Jinping to call him for discussions about a potential deal after slapping 145 per cent tariffs on most Chinese goods.

“China, at 145 per cent, is not a viable sales market for us at the moment,” said Donovan Owens, president of Smithfield’s fresh pork business.

Smithfield ships pork to more than 30 countries, and exports accounted for 13 per cent of its sales last year, according to the company.

Total U.S. exports of pork products to China were valued at about $1.1 billion (C$1.5 billion) in 2024, U.S. government data show.

“We can’t underestimate the importance that China has been to the overall industry,” Smith said.

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Comparable sales in the U.S., McDonald’s biggest market, fell 1.4 per cent in the fourth quarter, its steepest drop since the height of the COVID-19 pandemic almost five years ago when restaurants limited operations to drive-thru and delivery.

Analysts on average had estimated a 0.4 per cent decline, according to data compiled by LSEG.

The burger giant saw customer visits weaken following an E.coli outbreak that started on October 22 and forced McDonald’s to temporarily suspend sales of its Quarter Pounder hamburgers in a fifth of its 14,000 U.S. restaurants.

The U.S. Centers for Disease Control and Prevention on December 3 ended its investigation of the incident, which sickened hundreds and killed at least one person.

Similar to fast-food rivals such as Yum Brands and Wendy’s, McDonald’s also ramped up its limited-time offers and meal deals throughout 2024 in an attempt to spur spending among customers preferring to eat meals at home.

The company extended its $5 meal deal launched in June into December and introduced Chicken Big Mac in October, along with other special releases.

Customer traffic ticked up slightly in the quarter from last year, McDonald’s reported, but that increase was offset by a smaller average amount spent per customer per visit.

Analysts have warned that the company’s overreliance on discounts, which now account for over a third of sales, according to BTIG analyst Peter Saleh, could pressure franchise margins in the future.

“In our view, the challenge McDonald’s faces in the months and quarters ahead will be weaning customers off these deep discounts,” Saleh said.

Comparable sales in the company’s International Developmental Licensed Markets segment rose 4.1 per cent in the quarter ended December 31, beating estimates of a 0.43 per cent drop. The improvement was led by Middle East and Japan markets.

Sales in international markets rose 0. per cent, saddled by weakness in Britain.

Global same-store sales increased 0.4 per cent in the quarter, a surprise rise compared with analysts’ expectations of a 0.63 per cent decline.

McDonald’s posted a five per cent drop in net income to $2.04 billion ($C2.92 billion) on an adjusted basis, compared to estimates of $2.07 billion (C$2.96 billion)

—Reporting by Savyata Mishra in Bengaluru and Waylon Cunningham in New York

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Consumers, wary of higher grocery prices, have turned to cheaper private label brands, hurting sales at packaged food companies including Conagra, Campbell’s Co, Kraft Heinz and JM Smucker.

In response, these companies have ramped up promotions on their branded food products this year, introducing smaller pack sizes and increasing advertising to entice shoppers.

Conagra, which typically caters to more budget-strapped customers, said volumes improved in the snacking and staples categories such as microwave popcorn, and frozen vegetables on the back of promotions, thought it remains cautious on deep discounting.

“We’re still seeing value-seeking behaviors, with consumers prioritizing affordability and maximizing value,” CEO Sean Connolly said in prepared remarks.

Conagra expects rising cocoa and sugar prices to pressure its margin and said a stronger dollar would hurt its international segment sales in the back half of the year.

“Company’s updated view better reflects the consumer environment but the pivot to ramp merchandising takes a toll on margins,” RBC analyst Nik Modi said.

Conagra now expects fiscal year 2025 adjusted profit per share in the range of $2.45 to $2.50 (C$3.52 to 3.59), compared with its prior target of between $2.60 and $2.65 (C$3.74 to 3.81) .

It also lowered its adjusted operating margin forecast to about 14.8 per cent, from a range of 15.6 per cent to 15.8 per cent.

Shares of the Slim Jim beef jerky maker were down two per cent in early trade, after having declined about four per cent this year.

The company posted a smaller-than-expected drop in second-quarter sales as price cuts across its categories helped prop up demand that has slowed over the last few years.

Net sales came in at $3.20 billion (C$4.60 billion) for the three months ended Nov. 24, compared with analysts’ average estimate of $3.15 billion, according to data compiled by LSEG.

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Shares of the company were down 2.4 per cent before the bell on Tuesday even as it beat profit estimates.

Global sales fell 1.5 per cent in the third quarter, the biggest decline in four years, compared with analysts’ average estimate of a 0.72 per cent fall, according to data compiled by LSEG.

Last week, McDonald’s temporarily paused serving Quarter Pounders in a fifth of its 14,000 U.S. restaurants in an E. coli outbreak that has killed at least one person. Shares declined nearly seven per cent last week as infections rose to 75 people. Quarter Pounders were being added back to the menu this week.

Slivered onions used in the hamburgers are likely to be the source of the infection, with the Colorado Department of Agriculture over the weekend ruling out beef patties as the possible cause.

Customer visits in the U.S. fell 6.4 per cent, 9.1 per cent and 9.5 per cent year-over-year on October 23, 24 and 25, respectively, according to a Gordon Haskett note. The company’s conference call on earnings is expected to focus on any fallout from the outbreak.

The outbreak likely has thrown a near term “monkey wrench” into the U.S. sales recovery when coupled with mixed third-quarter results, Citi analyst Jon Tower said.

The fast-food chain has been hit by slowing customer visits across the U.S., France, UK, Middle East and China as price-conscious shoppers looked for cheaper meals and cooked more at home.

International markets struggle

Sales in international markets fell 2.1 per cent, driven by weakness in France and Britain, compared with estimates of a 1.21 per cent drop.

Weaker consumer spending in China and impacts of the Middle East conflict have dented McDonald’s business segment where restaurants are operated by local partners, with sales dipping 3.5 per cent compared with a 10.5 per cent rise a year earlier.

“We believe European economies remain under pressure with potential for softer traffic from concerns with war in the Middle East, especially in urban markets, and some pressure on costs from a stronger dollar,” Jim Sanderson, analyst with Northcoast Research.

Western fast-food chains such as McDonald’s and Starbucks have seen boycott campaigns over their perceived pro-Israeli stance and alleged financial ties to Israel.

U.S. comparable sales grew 0.3 per cent, reversing the previous quarter’s drop, aided by promotions.

Overall sluggish demand has prompted fast-food chains including McDonald’s, Wendy’s, Burger King and Taco Bell to lean into meal bundles and limited-time offers in a bid to revive traffic, especially among lower-income customers.

McDonald’s CEO Chris Kempczinski said the company was focused on affordability as customers continue to be mindful about spending.

The Chicago-based company earned $3.23 per share on an adjusted basis, above analysts’ estimates of $3.20.

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