How will Trump's tariffs affect grocery store prices? We explain.
How will Trump's tariffs affect grocery store prices? We explain.
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How to save money on groceries
Save money buying groceries with these budget-friendly tips.
ProblemSolved, USA TODAY
How are current tariffs – and the threat of higher tariffs – going to affect grocery prices in the U.S?
It depends, those in the food industry say. The United States produces and manufactures a lot of its food domestically, but also relies a lot on imported goods.
"The short answer is yes, prices are going to go up," said David Ortega, a food economist and professor at Michigan State University. "They may not skyrocket for all imported products, but they will go up. Tariffs are a tax on imports, so by definition they are inflationary."
And while higher tariffs could still be coming after a 90-day-pause, the baseline 10% tariff on all goods, plus higher duties on Chinese products already in effect are a big increase in food costs for American's budgets, said Thomas Gremillion, director of food policy at The Consumer Federation of America.
"The 10% 'default' tariffs alone represent a truly historic federal tax increase, maybe the largest in my lifetime, with a highly regressive impact," Gremillion said.
Tariffs imposed at the border
The tariff only applies to the value of the product at the border, said Ortega. Then there's additional costs to the product, which are accrued domestically, like transporting the goods to the store, distribution, wholesale costs and retail markups. Those things are not subject to the tariff, said Ortega.
So that doesn't mean that the price of a particular product will go up by 10% or whatever the tariff is, said Ortega.
Tariffs will cause price increases and uncertainty
Overall, 15% of the U.S. food supply is imported, including 32% of fresh vegetables, 55% of fresh fruit, and 94% of seafood, according to the Consumer Federation of America, citing the U.S. Food and Drug Administration. Some products, like coffee and bananas, are almost exclusively grown abroad.
Tariffs are causing uncertainty, for families checking off their grocery lists to companies importing food, he said.
"For consumers, this can mean added difficulties in managing a food budget. For food companies, this means havoc on supply chains that could lead to more food waste and more food safety risk," Gremillion said.
Seafood prices could see tariff impact
One category that could be especially hit is seafood, said Swanson. It remains to be seen how that will be tariffed, especially with the trade war going on with China.
"A lot of seafood is caught here and then taken to China, where the labor is much more available and is a lower price to debone, to skin, to devein and then repackage, frozen and brought back to the United States," he said. The question is will that be tariffed.
"Will it be tariffed going in (to China), tariffed coming out and then it will become uneconomical for everybody?" Swanson asked.
Consumers have year-round demand for produce, fruits
Fresh produce will also likely cost more.
"Consumers will feel these price hikes at the grocery store, especially for products where we rely on imports to meet year-round consumer demand,'' Ortega told USA TODAY.
Shoppers' demand for fresh fruits twelve months a year is part of the reason why the United States imports many of them, said Ortega.
"We rely on international trade and imports for agricultural products in order to meet year round consumer demand for a lot of these items," Ortega said.
The U.S. can't grow some of the products domestically, such as bananas, or can only produce them seasonally, said Ortega. In many cases, it's cheaper to import food than to grow it domestically, largely due to labor cost differences, he said.
Similarly, though a small amount of coffee is grown in Hawaii, "we don't grow enough coffee domestically to be able to meet consumer demand," he said.
"So those things that are facing 10% tariffs, you will see the price go up," Ortega said.
He added that: "low-income households are affected the most, since they spend a higher portion of their disposable income on food."
Prices for some food products could go up, even without tariffs
Some retailers may still increase the price of a product, even if the product itself wasn't subject to a tariff, said Chris Costagli, vice president and food insights lead for NielsenIQ.
Manufacturers have something called "industry price gap management," which is the comparison of the price of their product versus their competitor, said Costagli. Even if you're a completely U.S.-based food product, "if all your competitors' prices are going up because they're affected by a tariff... you may raise your price, he said.
Additionally, a food product may have been made in the United States, so doesn't have a tariff levied on it, but the packaging or other ingredients to make the food may be imported, Costagli told USA TODAY. That could lead to a price hike.
Consumers are confused about tariffs
In a NielsenIQ study in March, 81% of consumers surveyed said they were somewhat familiar with the effect of tariffs on grocery prices and 73% believed the tariffs would impact the price of groceries. The survey was conducted when tariff discussion was only surrounding Canada and Mexico and before the reciprocal tariffs were announced, then paused and the hefty tariffs on China were implemented.
But keeping track of tariffs is confusing, especially as the tariff policies have changed.
Currently, there is a 25% tariff on goods from Mexico and Canada, unless they are products covered under an agreement called the United States-Mexico-Canada-Agreement (USMCA) and a 10% baseline tariff on all imported goods from other countries. There is a 145% tariff on goods imported from China.
When Trump first announced the tariffs, he said all goods, including those coming from Mexico and China and covered under the USMCA agreement, would be subject to the extra fees. But then the president backed off that decision, saying the USCMCA-covered goods would not be tariffed. Additionally, there was a 90-day pause on any reciprocal tariffs beyond the 10%.
Some agricultural and food products are covered under the USMCA, but it is difficult to distinguish which products are currently coming in with or without tariffs because there's an extra cost and hassle for importers to verify themselves under the USMCA, so some may just pay the tariff, said Ortega.
And many are having to wait and see what other tariffs might happen.
"I think a lot of people just have no idea what is what is tariffed and what isn't tariffed," said Costagli.
U.S. produces a lot of our own food, so prices could come down
The United States grows and produces a lot of food products and is a huge net surplus producer, which means "we need to take that product out to the global markets. We just produce too much of it," said Michael Swanson, Chief Agricultural Economist Wells Fargo Agri-Food Institute.
We export about 15% of our poultry overseas and about 20% of our pork overseas, said Swanson.
"If we lost some of those markets, that would have to stay in the domestic market and could actually depress prices," he said. "So we might actually see pork and poultry prices come down as the market has to sell it in America first before they can reduce the supply on an ongoing basis," he said.
To save, look for substitions
Consumers can try to save money by sticking to foods that are grown, produced or manufactured in the United States – and there's a lot of them, said Swanson.
There will still be some things that they will have to pay more for, if there is no substitution or if they're not willing to trade for a different product, he said. For instance, champagne from the Champagne region of France or Parmesan cheese that only comes from Parma, Italy.
But there are growers of parmesan cheese in Wisconsin and that product is cheaper than the Parma, Italy version.
Consumers may consider other substitutions like trying bourbon from Kentucky instead of scotch from Scotland, which could increase in price due to tariffs, Swanson said.
Study: Consumers worried about tariffs are pulling back on spending
Some products could see price increases
Here's some food products that could see price increases, due to tariffs, according to Ortega:
Bananas: nearly all bananas consumed in the U.S. are imported (from countries like Guatemala, Costa Rica, Ecuador, Colombia, etc).
Coffee: outside of Hawaii and Puerto Rico, the U.S. does not grow much coffee. Tariffs would hit virtually the entire supply – we import coffee from Brazil, Colombia, Vietnam and other countries.
Olive oil: the vast majority of olive oil consumed in the U.S. is imported, with a lot of it coming from Europe. There is some production in California, but that is relatively negligible when you look at the full supply.
Tips to save on food costs
Gremillion, with The Consumer Federation of America, offers these tips to save on food costs with potential tariff increases:
Watch out for big price swings. With so much seafood imported, fish prices seem likely to rise, but other impacts may come as a surprise. For example, prices for chicken breasts and thighs may go up due to Chinese retaliatory tariffs on frozen chicken feet, which threaten to cut off a $1.1 billion source of revenue for U.S. poultry processors.
Make a list and stick to it. Food manufacturers in the U.S. spend an estimated $50 billion in placement and promotional fees to grocery chains, all with the intention of swaying your purchasing decisions.
Beware of shrinkflation. Wary of driving away customers with higher prices, many manufacturers have taken to shrinking package contents. Look at the per-unit cost.
Check out frozen, dried, and canned goods. 'Healthy' foods include more than just fresh produce.
Consider generic or 'store' brands. These foods, also referred to as 'private-label brands,' are often produced in the same manufacturing facilities, with the same ingredients, as more heavily marketed national brands.
Sales aren't always good deals. Sometimes sales can lure you into buying an item you don't need or paying a price that is too high.
Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at blinfisher@USATODAY.com or follow her on X, Facebook or Instagram @blinfisher and @blinfisher.bsky.social on Bluesky. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.
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