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 20245 Annual Report on Form 10-K (the "20245 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 20245 Form 10-K.

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

Developments in economic and fiscal policy, most notably those related to tariffs that were being contemplated by regulatory authorities at the time we filed the 2025 Form 10-K with the SEC, have had a nominal impact on our Company through the first quarter of 2026. 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 toand do not qualify as exempt from tariffs. Certain purchases are at higher costs in 2025 due to the current tariffs under USMCA. Imposing tariffs on goods we either import directly or purchase from suppliers who import certain materialproducts would have a negative impact on our business as well. We may be able to mitigate some of thisthe impact by evaluating our sourcing strategies or working with our vendors, but in manyost instances the inputs we need are only available from certain areas of the world outside of the United States. Until such timeSMCA. In addition, following that more clarity regarding tariffs, as well as possible retaliatorye recent U.S. Supreme decision issued in February 2026 that invalidated tariffs, is forthcoming, we are not able to ascertain  imposed pursuant to the International Emergency Economic Powers Act (IEEPA), the full effect of U.S. announced tariffs on our business.

The Companunder different statutory anticipates continued developments in food industry legislation and regulatory requirements at uthorities, including a 10% global tariff. The full impact of the federal and state level and such developmentsse governmental actions on macroeconomic could adversely affectnditions and on our business and operating resis uncertain, difficults.

With recent leadership changes at the U.S. Department of Health and Human Services and the U.S. Food and Drug Administration (FDA) and various state legislation, to predict and depends on a number of factors, including the food industry is subject to increasing laws aextent and reguldurations, as well as of tariffs, changes in consumer expectationsthe amount and scope of tariffs, and behavior. Fy reversal or example, in April 2025, it was atemporary suspension of announced thatariffs, the FDA inteavailability of refunds to phase out for tariffs paid under IEEPA, and the approved useimposition of petroleum-based synthetic dyes in food products. Many states,new tariffs and other measures that target countries may take including West Virginia, have passed, or are in th response to U.S. trade process of passing, legislationolicies. Until such time that prohibits or restricts the sales of products with petroleum-based synthetic dyes within their respective states. The Company anticipates continued developmenmore clarity regarding tariffs, as well as possible retaliatory tariffs, is forthcoming, we are not able to ascertain the effects in food industry legislatiof tariffs on and regulatory requirements at the federal aour business and state level. The significance of the impact remains uncertain at this time, ahave not recorded any adjustments the Company continues to monitor and evaluo our financial statements relate the evolving legd to potential andIEEPA tariff regulatory lafundscape.

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