Examining the Potential Effects of Proposed Tariffs on Grocery Prices

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 played a role in his electoral victory, numerous experts caution that his proposed tariffs could actually exacerbate the problem.

As Americans cast their votes, their concerns about rising prices and the state of the economy were paramount. Shoppers have been facing record-high inflation rates, with the impacts of the COVID-19 pandemic and global issues such as the ongoing conflict in Ukraine causing substantial disruptions in supply chains and driving prices up. According to the Consumer Price Index, grocery prices are anticipated to be nearly 25% higher in 2024 compared to pre-pandemic levels. Notably, a survey by AP VoteCast revealed that 60% of voters who were particularly worried about the economy opted for Trump.

Nonetheless, experts warn that one of Trump’s key campaign promises—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, asserts, “This approach is likely to backfire. Rather than lowering prices, these tariffs are almost guaranteed to drive them up.”

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 has argued that these tariffs would primarily affect other nations, not American consumers. “We are going to be a tariff nation,” he stated at a campaign rally in Mosinee, Wisconsin, in September. “It’s not going to cost you; it’s going to cost another country.”

However, experts contend that American consumers could still feel the impact at the grocery store if these tariffs are implemented.

Felix Tintelnot, an economics professor at Duke University, explains, “Although the law states that the importer is responsible for paying the tariff at the border, it doesn’t imply that the economic burden remains solely with them.” Many importers may raise prices to offset the tariffs, ultimately passing those additional costs onto consumers, Tintelnot adds.

According to an analysis by the Peterson Institute for International Economics, Trump’s proposed tariffs could impose an annual cost of approximately $2,600 on the average American household, with lower-income families bearing the brunt of this burden. Recently, Walmart’s CEO indicated to CNBC that the retail giant might have to raise prices on various items if these tariffs are enacted.

Read More: How to Buy Groceries Right Now Without Breaking the Bank

The grocery items most likely to be affected include those that are challenging 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 “intermediate goods”—such as fertilizers, machinery, and packaging materials—to produce food. “When these imported products incur tariffs, it acts like a tax that raises production costs, which are then passed on to consumers through higher prices,” he explains.

Additionally, the implementation of tariffs may provoke retaliatory actions from other countries, further affecting costs for American taxpayers. For example, after the Trump Administration introduced tariffs on China in 2018, China retaliated by imposing tariffs on soybean imports, leading the U.S. government to provide a $28 billion aid package to farmers, funded by taxpayers.

While the tariffs imposed in 2018 targeted a limited range of goods, including washing machines, solar panels, and metals, the current proposals are far broader, which could result in a more significant impact on consumers this time around. Tintelnot notes, “We can expect more pronounced price effects now because a wider variety of goods will be subjected to tariffs across the board.”