Grocery shoppers could feel the impact of a drastic new tariff impact by the Trump administration before April ends. And you’ll feel that the first place is in some stores where stock needs to move quickly.
On the agricultural corridor, prices for everyday purchases like bananas from Guatemala and grapes from Peru are expected to rise slightly on Thursday. Another round-trip tariff from 57 countries will follow Wednesday.
The seafood counter can hold even worse surprises. Grocers sell a lot of shrimp from Vietnam, with President Trump attacking 46% mutual tariffs and India attacking 26% mutual tariffs.
Soon, analysts say you’ll get the prices of staple foods like sugar and coffee. Specialized coffee beans could ultimately cost consumers 10-35% more than customs duties, Bean buyers predicted.
Since the pandemic, grocery stores have expanded their line of low-priced private label products. While customers loved them as a way to navigate inflation, tariffs increase costs.
“It was a bit of a shelter for the consumer,” said Keith Daniels, managing partner at Carl Marks Advisor, an investment bank that focuses on the food and grocery sector. “It’s not there right now.”
Still, he and some food executives said they predicted that it would be difficult, if not impossible, how far the prices change food prices, as so many of the food on US shelves are being processed overseas or contain ingredients and packaging from several countries.
As retailers reassess their pricing strategies and determine how long the inventory they already have in the country will last, some of the tariff costs may be absorbed and not handed over to consumers.
Still, there are high opportunities for price gouging and other forms of manipulation, says Errol Schweiser, a veteran in the grocery industry who publishes a newsletter Checkout grocery update.
“Consumers don’t know if things are priced correctly or torn apart,” he said.
At all levels of the food business, understanding additional documents takes time. Walmart requires suppliers to notify them of price increases in advance and provide clear documentation for them. However, some companies have not yet set up a system to record and pay customs duties.
“It takes a year for all these costs to ripple over, but in 12 months you can see the overall high prices,” said Jeff Dunn, executive chairman of generous brands and Bolthouse’s fresh produce.
Large food producers like Mondelez and Kraft Heinz are better suited to absorb the effects of tariffs than small businesses with relatively thin operating margins. For these small players, emerging new tariffs can include fast, creative and strategic cost savings.
On Thursday, Paleovalley, a Colorado company that manufactures meat sticks and other products, was rushing to mitigate the potential impact of tariffs on imported Monkfruit Purée, a difficult ingredient to source.
Ethan Frisch is the co-founder and co-director of Burlap & Barrel, imports spices from 30 countries and purchases them exclusively from small producers. There are already shipments of cinnamon from Vietnam on ships. Farmers and shipping companies are all paid. He doesn’t know if he has to pay the duties.
Because of such uncertainty, he decided to scale back other products the company had planned to introduce later this year, like an advent calendar filled with spice samples from around the world surrounded by celebration packaging manufactured in China.
New York City’s specialty food store, Yun Hai buys directly from rice farms, soy sauce breweries and factories in Taiwan, then supplies large quantities of products to grocery stores and restaurants across the country. New tariffs on these foods are 32%, most of which do not have local alternatives.
“We are importers, so we are on the forefront,” said Lisa Chen Smith, the company’s CEO. Lisa Chen Smith was announced just one day before the recent shipments of her products were announced on Tuesday. She plans to look at creative ways to reduce other costs by 32% without losing her business.
“We don’t panic, we just need to raise prices right away,” she said.
In the meantime, hoarding may not be a bad idea, said Sam Silverstein, a reporter for the Trade Publications grocery dive.
“It’s harder to stock up on avocados than a can of soup,” he said.
Tejal Rao contributed the report.
