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Trump's Tariffs to Spike Prices of Fresh Fruit, Coffee, and Seafood

Trump's Tariffs to Spike Prices of Fresh Fruit, Coffee, and Seafood

New York (CNN) — President Donald Trump called groceries an “old-fashioned” and “beautiful term,” but his policies will make America’s groceries more expensive today, supermarket executives and food industry experts say. Supermarkets sell imported items in every section of the store: from fresh and packaged foods to household basics. US businesses shipping goods from overseas will pay for tariffs, and they will pass some of the higher costs down to consumers.

Shoppers can expect to see prices rise on seafood, coffee, fruit, cheese, nuts, candy bars and other imported foods, according to experts. Items that contain ingredients and packaging like plastic and aluminum from other countries will also be hit. Perishable food prices will rise first, followed by shelf-stable goods. Customers may also see smaller-sized products, known as shrinkflation, and find that certain versions of items have been eliminated as companies try to offset their cost hikes from tariffs.

Customers can expect grocery prices to increase “in the next couple of weeks,” said John Ross, CEO of IGA, a chain of independent grocery stores. “Shoppers will start seeing it at scale across the store in the next 90 days.”

Food prices will rise 2.8% overall from Trump’s tariffs, including 4% for fresh produce, Yale University’s Budget Lab estimates. The cost burden will hit lower-income shoppers, who spend a greater share of their income on essentials, the hardest.

Hit to smaller companies first

The scale of the price hikes will also depend on the size of the companies.

Prices at smaller grocers, which have less flexibility to absorb higher costs than giant chains like Walmart and Costco, may rise faster. Big food suppliers such as Campbell and Kraft Heinz also have more flexibility to manage tariffs than smaller producers. But few companies will be spared from the effects.

“It appears that the small distributors are reacting a lot more quickly,” said Steve Schwartz, director of sales and marketing at grocery chain Morton Williams. Small distributors have less supply on hand and will raise prices first, while larger companies with more inventory in warehouses can wait longer, Schwartz said.

Randy Arceneaux, CEO Affiliated Foods, a wholesaler in Amarillo, Texas servicing around 700 independent grocery stores in eight states, said that most suppliers are still waiting to see what happens with tariffs. But that’s not the case with all Affiliated Food’s suppliers —several have already notified the company of price increases because of tariffs, including bananas and canned tuna, as well as plastic utensils.

Affiliated Foods sources bananas from Guatemala, where Trump implemented a 10% tariff. Affiliated Foods’ distributor notified the company that a 10% price increase will go into effect next week. This will increase Affiliated Foods’ costs by 4 cents per banana case, from $1.80 to $1.84, which will be passed on to shoppers.

The foods Americans eat are part of a complicated global supply chain. Much of the food is impossible to replicate stateside because of climate and crop conditions. Food that can't be grown locally will see the biggest rise in prices.Currently, the US imports approximately 17% of all food and beverages consumed by Americans, but it varies dramatically by category. For example, around 80% of seafood, 80% of coffee, 59% of fresh fruit, and 35% of vegetables consumed in the United States are imported, according to the Department of Agriculture."Our food system is intricately linked with global markets − including products not grown in the United States like bananas or seasonal items − which helps keep prices down while providing American shoppers year-round access to safe, nutritious food," Leslie Sarasin, the president of a food industry group, said in a statement last week.But one major factor that could limit price increases is that Mexico and Canada were left off Trump's latest tariff list. Mexico and Canada are the two largest agricultural suppliers to the United States, according to the Agriculture Department.The White House has slapped 25% tariffs on those countries, but most food and agricultural products are exempt from tariffs under the existing free trade agreement between the United States, Mexico, and Canada.Grocery prices already frustrated customers before tariffs. Trump said he won the election in large part due to the price of groceries.Grocery prices overall have increased around 23% since 2021, with prices on individual items like coffee and chocolate rising much faster. That's caused shoppers to pull back. PepsiCo, Campbell, and JM Smucker reported weak sales of their snack brands in recent earnings announcements, and tariffs will likely only accelerate the slowdown.PepsiCo said last month that people bought 3% fewer snacks last quarter. "Salty and savory snack categories underperformed" the broader packaged food industry, PepsiCo said, citing the "cumulative impacts of inflationary pressures and higher borrowing costs on consumer budgets."Household staples, such as dish detergent, paper towels, and cosmetics, have also seen a slowdown in recent weeks, according to market research firm Circana. "Some consumers are moving away from discretionary spending" at the grocery store, said Sally Lyons Wyatt, Circana's chief advisor for the consumer goods and food service industries.More shoppers are taking quicker, smaller trips to stores, and switching to stores' cheaper private-label brands, she said. These are signs that customers are watching their budgets more carefully. Customers "are still showing that willingness to spend, but they're being very choiceful where they're spending," Costco finance chief Gary Millerchip said last month.
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