Tootsie Roll Industries Inc

ITEM 1A. RISK FACTORS

The following update to our risk factors should be read in conjunction with the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our 2024 Annual Report on Form 10-K (the "2024 Form 10-K") filed with the SEC. Except as described herein, the Company is not aware of any material changes with respect to the risk factors disclosed in our 2024 Form 10-K.

Our business and operating results could be materially adversely affected by the imposition of tariffs and other surcharges on our products and the ingredients, packaging and operating equipment and supplies used in our products.

Our products are principally produced and sold in North America. Product shipped and transferred between the United States and our Canada and Mexico manufacturing operations qualify under the U.S.-Mexico-Canada Agreement (USMCA) and under the current regulation, continue to be tariff-free. If regulators decide to impose tariffs, or other surcharges are levied by Canada and Mexico, on products that previously qualified under USMCA, the impact of tariffs on our cross-border shipments could be significant. Notwithstanding, we procure certain ingredients, including cocoa, chocolate and edible oils, as well as some packaging and other operating equipment and supplies, from sources outside of the United States which are currently subject to tariffs. Certain purchases are at higher costs in 2025 due to the current tariffs. Imposing tariffs on goods we either import directly or purchase from suppliers who import certain materials would have a negative impact on our business. We may be able to mitigate some of this impact by evaluating our sourcing strategies or working with our vendors, but in many instances the inputs we need are only available from certain areas of the world outside of the United States. Until such time that more clarity regarding tariffs, as well as possible retaliatory tariffs, is forthcoming, we are not able to ascertain the full effect of tariffs on our business.

The Company anticipates continued developments in food industry legislation and regulatory requirements at the federal and state level and such developments could adversely affect our business and operating results.

With recent leadership changes at the U.S. Department of Health and Human Services and the U.S. Food and Drug Administration (FDA), as well as the Make America Healthy Again movement and various state legislation, the food industry is subject to increasing laws and regulations, as well as changes in consumer expectations and behavior. For example, in April 2025, it was announced that the FDA intends to phase out the approved use of petroleum-based synthetic dyes in food products. Many states, including West Virginia, have passed, or are in the process of passing, legislation that prohibits or restricts the sales of products with petroleum-based synthetic dyes within their respective states. The Company anticipates continued developments in food industry legislation and regulatory requirements at the federal and state level. The significance of the impact remains uncertain at this time, as the Company continues to monitor and evaluate the evolving legal and regulatory landscape.