Examining the Effects of Proposed Tariffs on Grocery Costs
On the campaign trail, President-elect Donald Trump brought attention to the financial burden that escalating grocery prices were imposing on American families, vowing to provide relief for those struggling with food expenses. While this commitment may have played a role in his electoral victory, numerous experts caution that his proposed tariffs might actually exacerbate the problem.
As Americans went to vote, worries about soaring prices and the state of the economy were at the forefront of their minds. Shoppers have faced unprecedented inflation rates, heavily influenced by the ramifications of the COVID-19 pandemic and global issues such as the ongoing conflict in Ukraine, which have caused significant supply chain disruptions and price hikes. According to the Consumer Price Index, grocery prices in 2024 are expected to be nearly 25% higher than pre-pandemic levels. Notably, a survey by AP VoteCast revealed that 60% of voters who expressed strong concerns about the economy chose Trump.
However, experts warn that one of Trump’s primary campaign pledges—a 10-20% tariff on all imports, with certain goods from China facing tariffs as high as 60%—could lead to increased grocery prices for consumers.
David Ortega, a food economist and professor at Michigan State University, says, “This policy is likely to backfire. Instead of lowering prices, these tariffs will almost certainly lead to an increase.”
Read More: What Donald Trump’s Win Means for Inflation
Trump has expressed his desire to impose tariffs on imported goods, including food, as a strategy to strengthen American manufacturing and address what he perceives as unfair trade practices by China. He insists that these tariffs will not burden American consumers. “We’re going to become a tariff nation,” he declared at a campaign rally in Mosinee, Wisconsin, in September. “It’s not going to cost you; it’s going to cost another country.”
Nonetheless, experts argue that consumers are likely to feel the impact at the grocery store if these tariffs are implemented.
Felix Tintelnot, an economics professor at Duke University, explains, “While the law states that the importer pays the tariff at the border, that doesn’t mean the economic burden remains with them.” Many importers may raise prices to offset the tariffs, ultimately passing those costs onto consumers, Tintelnot adds.
An analysis from the Peterson Institute for International Economics estimates that Trump’s proposed tariffs could cost the average American household about $2,600 each year, with lower-income families bearing a disproportionate burden. Recently, Walmart’s CEO indicated to CNBC that the retail giant might need to raise prices on various items if these tariffs come into effect.
Read More: How to Buy Groceries Right Now Without Breaking the Bank
The grocery products most likely to be affected include items that are hard to grow or produce in many regions of the U.S., necessitating imports, such as coffee, bananas, and cocoa.
Moreover, Ortega warns that tariffs may also impact the prices of domestically produced goods. Many U.S. manufacturers rely on imported “intermediary goods”—such as fertilizers, machinery, and packaging materials—to produce food. “When these products face tariffs, it’s like a tax that increases production costs, which are then passed on to consumers through higher prices,” he explains.
Additionally, tariffs can provoke retaliatory actions from other nations, which could further affect costs for American consumers. After the Trump Administration imposed tariffs on China in 2018, for example, China responded with tariffs on soybean imports, leading to a $28 billion aid package for farmers funded by taxpayers.
While the 2018 tariffs targeted a limited selection of goods, such as washing machines, solar panels, and metals, the current tariff proposals are much more extensive, suggesting a greater impact on consumers this time. Tintelnot notes, “We can expect more significant price increases now because a broader range of goods will be subject to tariffs across the board.”
