The U.S. is introducing a 20% import tariff on all products from the European Union, as announced by President Trump in a speech in the White House garden. A minimum tariff of 10% will apply to all countries worldwide, with significantly higher rates for certain nations, up to 54% for Chinese products. The minimum tariff takes effect on Saturday, with the rest following next Wednesday. Reactions from the sector indicate that it's not so much the tariff itself, but the uncertainty it creates that is impacting the horticultural industry.
© Arlette Sijmonsma | MMJDaily.comUnder Trump's previous order, a 25% tariff was applied to all Mexican and Canadian goods that are not compliant with the United States-Mexico-Canada Agreement.
Higher tariffs
For some countries, the tariff is much higher than for the EU. Israel faces a 17% tariff on exports to the U.S., while India will see a 26% tariff, and Sri Lanka even a 44% tariff. China will be subject to a 34% tariff on top of the 20% Trump previously imposed.
Canada and Mexico, the U.S.'s neighboring countries, will not face new tariffs, although the previously announced 25% tariffs will take effect - but note these don't apply to Mexican or Canadian fresh produce, which are compliant with the USMCA agreement.
Reaction from the EU MMJ space
Horticultural suppliers expected to be affected by these tariffs are hesitant to respond, as the issue is politically sensitive and still unclear. Questions remain about shipments already en route to the U.S., the price of horticultural glass, which is mainly imported from China, and whether exemptions will be granted for agricultural technologies—similar to past exemptions for specific steel and aluminum products.
"It is claimed that growers will source their products locally, but many Dutch technologies are imported precisely because they aren't available in the U.S.," a Dutch supplier said. "The Netherlands is a major supplier because of its high level of expertise."
Considering the higher value of cannabis crops, Christian Hochfilzer from SanSol, a LED supplier, believes that cannabis growers who wants to source their lighting system from the US will still do so, as long as the quality of the product and system justify it. However, he points out that the majority of EU MMJ growers source their equipment from European companies. This would mean that growers potentially wouldn't feel the effect on the tariffs, and perhaps not even new growers.
Leo Kotlyar, founder of consultancy Dewarrior.com and CEO of Rivamo AG, shared his perspective on the potential impact of U.S. import tariffs on the MMJ industry. While acknowledging some supply chain disruptions - such as chip production in Taiwan and Malaysia affecting lighting components - he noted that most lighting systems were ordered and paid for years ago, minimizing immediate consequences. However, new producers in Canada relying on U.S. lighting suppliers or sourcing from China and Taiwan may face cost increases. Stone wool, the primary substrate for MMJ cultivation, remains unaffected by tariffs, though shipping costs could fluctuate unpredictably.
Leo emphasized a broader economic shift: "If I'm looking at the big picture, the age of globalization is over." He sees the challenge of localizing supply and value chains as inevitable but manageable. While MMJ itself may not be directly impacted by tariffs, he believes the overall mindset will shift toward protectionism, with European markets increasingly favoring local over imported products. "People in Europe will see it as an 'us vs. them' thing and will look to localize," he explained. He highlighted Switzerland as an example, with top-tier cultivators eager to enter the German market. Despite the challenges, Leo sees these changes as a net positive, reinforcing the idea that "economics is people reacting to incentives."
That same sentiment is echoed by Stephen Malloy from PharmaRolly Holdings B.V., which has cultivation in North Macedonia. At the same time, he believes that the real issue for EU medical cannabis growers is not tariffs, but something else: "The more important issue for medical cannabis in the EU is whether or not Trump's team pushes through the legalization of cannabis," he says. Legalization but also rescheduling will certainly open up more opportunities for cannabis growers, opportunities that they are currently barred from. Could, however, the tariffs have an impact on Canadian cannabis, and hence the cannabis imports into the EU. "I don't think there's any way for US taxes to change any tax situation in the EU for Canadian companies," continues Stephen.
One thing is certain: exporters have faced numerous challenges in recent years, from the pandemic and soaring raw material costs to the energy crisis and declining investor interest. Now, uncertainty over import tariffs adds yet another layer of difficulty. New construction has significantly declined, and the full potential of the market has not been realized in recent years. This new uncertainty only makes things more challenging.
Import of supplies
U.S. greenhouse companies rely on imports from various countries to support their operations, sourcing materials, equipment, and biological products. Structural components such as glass and polycarbonate panels often come from Europe and China, while metal frames and greenhouse automation systems are frequently imported from the Netherlands, Germany, and Israel. Growing media like coconut coir is supplied by India and Sri Lanka, whereas peat moss comes from Canada and the Baltic States. Many greenhouse operations depend on seeds from the Netherlands, Israel, and France, along with ornamental plants from Costa Rica and Thailand. Fertilizers and biostimulants are imported from Spain, Norway, and Belgium, while biological pest control solutions, such as beneficial insects and biofungicides, often come from the Netherlands, Canada, and France. Hydroponic and aquaponic systems integrate components from China, Japan, and Germany, including sensors, nutrient film technique (NFT) channels, and specialized water treatment technologies.
Existing growers will face higher production costs due to import tariffs on various cultivation supplies. However, Pascal van Oers from VEK notes that this impact is relatively minor in the overall financial balance of a greenhouse operation. The largest expenses for high-tech greenhouse farms are energy and labor, followed by capital. "Roughly speaking, the remaining quarter consists of raw materials, which will largely become more expensive." A key question is how U.S. energy prices will be affected. "The expectation is that they will rise further. However, energy-importing countries (such as LNG importers) may introduce countermeasures, potentially increasing energy availability in the U.S. and mitigating price hikes."
"Greater impact on suppliers than exporters"
Cindy van Rijswick of Rabobank Netherlands points out that the greenhouse builders will mainly feel the heat. "For suppliers, the consequences will be greater. Some greenhouse builders, for example, already operate in the U.S. and source materials locally, but they will now face higher costs for imported steel and other raw materials. Not everything can be sourced domestically. Other agricultural inputs, such as vegetable seeds and flower bulbs from the Netherlands, are also exported to the U.S. However, I don't expect a major price sensitivity for these products, so the impact should be manageable."
Cindy does not believe that these import tariffs will strengthen the U.S. horticultural sector. "This doesn't help U.S. horticultural companies at all. They were just starting to recover from a downturn, thanks to stabilized costs and stronger domestic sales. Now, all of that is at risk."