Trump’s tariff plan is likely to push up grocery prices, economists say

While the details of President-elect Donald Trump’s plan to impose stiff tariffs on imported goods remain fuzzy, federal data leaves little doubt that food from abroad plays an increasingly important role in feeding people in the United States.

Imported goods accounted for more than 17% of overall food and beverage consumption in the U.S. in 2022, up from 13.5% in 2013, according to data from the U.S. Census Bureau published by the USDA’s Economic Research Service. Over the past 25 years, the value of imported agricultural products has gone up five-fold, with imports of consumer-oriented agricultural goods increasing especially quickly as shoppers have come to expect seasonal items year-round.

The total value of food brought into the country in 2023 was just shy of $190 billion, up by almost three-quarters over the prior 10 years, the USDA reported last month.

The U.S. is particularly reliant on produce grown abroad. Imports represented about 60% of fresh fruit availability in 2021, up from about 50% in 2013, the USDA reported. Meanwhile, vegetables from outside the country accounted for almost 40% of the supply of those foods in 2021 in the U.S., compared with about 25% in 2013, according to the agency.

The country’s robust appetite for international goods is taking on added urgency for the grocery industry because Trump’s vow to levy new fees on imports is almost certain to push up prices for shoppers, according to economists.

Trump has talked about imposing a tariff of at least 10% on all imported goods and hitting products from China with a levy of 60% or even more, CNBC reported. Tariffs function as a revenue source for the federal government and fall under the control of the president, who can use them to try to boost U.S. producers by making imported goods more expensive.

While tariffs might not be aimed at shoppers, they ultimately wind up increasing prices for consumers because retailers typically pass on the added costs, said Michael Snipes, an associate professor of instruction of economics at the University of South Florida’s Sarasota-Manatee campus. 

“Tariffs are a tax, plain and simple. [They’re] a tax on imported goods, but it’s not really that much different from a sales tax,” Snipes said. “So this is something that is going to increase prices for everything that’s imported, and that includes food.”

David Ortega, a professor and food economist at Michigan State University, agreed that tariffs are likely to increase costs for shoppers, noting that many products U.S. shoppers depend on, such as coffee, are not grown in this country. Tariffs would also pressure grocery prices by boosting the cost of imported items used by food companies, such as manufacturing equipment, packaging and fertilizer, Ortega said.

While Trump talked during his campaign about bringing down grocery prices, the incoming president’s tariff plan isn’t likely to achieve that goal, Ortega said. Grocery inflation has fallen sharply since hitting a multi-decade high in mid-2022, but food prices have remained top of mind for shoppers.

“This is an example of a policy that is almost surely to backfire,” he said about the tariff proposal. “I don’t see any situation in which the tariffs that are being talked about would bring food prices down.”

Arun Sundaram, senior vice president at CFRA Research, said grocers are unlikely to feel as big a hit from tariffs as other types of retailers, particularly those that rely more heavily on goods manufactured abroad, like dollar stores.

“We don’t really know the scope of these tariffs, but I think that generally speaking, the grocery industry is [would] be less impacted than other industries,” Sundaram said.

Sundaram noted that grocers may need to find strategies to keep down prices on items made abroad, possibly by selling smaller packages to offset the higher costs they might incur.

“Tariffs are going to have an inflationary impact to the economy, so it’s going to lead to higher prices. The big what-if is how can companies find other ways to lower prices,” said Sundaram.