Examining the Effects of Proposed Tariffs on Grocery Costs

On the campaign trail, President-elect Donald Trump emphasized the burden that escalating grocery prices were placing on American households, vowing to provide relief to families grappling with food expenses. While this commitment may have bolstered his campaign, numerous experts caution that his proposed tariffs might actually exacerbate the issue.

As Americans cast their votes, worries about rising costs and economic stability loomed large. Shoppers have been dealing with record levels of inflation. The ongoing challenges from the COVID-19 pandemic, alongside global events like the conflict in Ukraine, have led to severe disruptions in supply chains and escalating prices. The Consumer Price Index forecasts that grocery prices in 2024 could be nearly 25% higher than pre-pandemic levels. Notably, a survey by AP VoteCast revealed that 60% of voters who expressed deep concerns about the economy supported Trump.

However, experts warn that one of Trump’s major campaign promises—a tariff of 10-20% on all imports, with certain items from China facing tariffs up to 60%—could drive grocery prices even higher for consumers.

David Ortega, a food economist and professor at Michigan State University, remarks, “This policy could backfire. Instead of lowering costs, these tariffs are likely to result in higher prices.”

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Trump has expressed his plan to impose tariffs on imported goods, including food products, as a strategy to strengthen American manufacturing and challenge what he views as unfair trade practices from China. He has asserted that these tariffs would not burden American consumers, stating, “We’re going to be a tariff nation,” during a campaign rally in Mosinee, Wisconsin, in September. “It’s not going to cost you; it’s going to cost another country.”

Nevertheless, specialists argue that consumers may still experience higher costs at the grocery store if these tariffs are implemented.

Felix Tintelnot, an economics professor at Duke University, clarifies, “While the law dictates that the importer pays the tariff at the border, the economic impact does not remain with them.” Many importers might raise prices to offset the tariffs, ultimately shifting those costs onto consumers, Tintelnot explains.

A study from the Peterson Institute for International Economics estimates that Trump’s proposed tariffs could cost the average American household approximately $2,600 each year, with lower-income families disproportionately affected. Recently, Walmart’s CEO indicated to CNBC that the retail giant may have to raise prices on various products if these tariffs take effect.

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The grocery items most likely to be affected are those 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 could 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 create food products. “When these products are subject to tariffs, it’s like a tax that raises production expenses, which are then passed on to consumers in the form of higher prices,” he explains.

Additionally, tariffs can provoke retaliatory actions from other countries, further increasing costs for American taxpayers. For example, when the Trump Administration imposed tariffs on China in 2018, China retaliated by applying tariffs on soybean imports, which led to the U.S. government providing a $28 billion aid package to farmers, funded by taxpayers.

While the tariffs enacted in 2018 were aimed at a limited selection of goods like washing machines, solar panels, and metals, the current proposals are much broader, suggesting a potentially larger impact on consumers. Tintelnot notes, “We can expect more substantial price increases now because a wider range of goods will be subject to tariffs across the board.”