How will tariffs - and the threat of higher tariffs - impact grocery prices in the United States?
It depends, according to experts in the food industry. The US produces a lot of its food domestically but also relies on imported goods.
"The short answer is yes, prices are going to go up," said David Ortega, a food economist and professor at Michigan State University. "They may not skyrocket for all imported products, but they will go up. Tariffs are a tax on imports, so by definition, they are inflationary."
While higher tariffs could still be coming after a 90-day pause, the baseline 10% tariff on all goods, plus higher duties on Chinese products already in effect, are a significant increase in food costs for Americans, said Thomas Gremillion, director of food policy at The Consumer Federation of America.
"The 10% 'default' tariffs alone represent a truly historic federal tax increase, maybe the largest in my lifetime, with a highly regressive impact," Gremillion said.
The tariff only applies to the value of the product at the border, Ortega said. Then there are additional costs to the product, which are accrued domestically, like transporting the goods to the store, distribution, wholesale costs, and retail markups. Those things are not subject to the tariff, Ortega said.
So that doesn't mean that the price of a particular product will go up by 10% or whatever the tariff is, Ortega said.
Overall, 15% of the US food supply is imported, including 32% of fresh vegetables, 55% of fresh fruit, and 94% of seafood, according to the Consumer Federation of America, citing the US Food and Drug Administration. Some products, like coffee and bananas, are almost exclusively grown abroad.
Tariffs are causing uncertainty from families checking off their grocery lists to companies importing food, he said.
"For consumers, this can mean added difficulties in managing a food budget. For food companies, this means havoc on supply chains that could lead to more food waste and more food safety risk," Gremillion said.
One category that could be especially hit is seafood, Swanson said. It remains to be seen how that will be tariffed, especially with the trade war going on with China.
"A lot of seafood is caught here and then taken to China, where the labor is much more available and is a lower price to debone, to skin, to devein and then repackage, frozen and brought back to the United States," he said. The question is, will that face tariffs?
"Will it be tariffed going in (to China), tariffed coming out, and then it will become uneconomical for everybody?" Swanson asked.
Fresh produce will also likely cost more.
"Consumers will feel these price hikes at the grocery store, especially for products where we rely on imports to meet year-round consumer demand,'' Ortega told USA TODAY.
Shoppers' demand for fresh fruits twelve months a year is part of the reason why the US imports many of them, Ortega said.
"We rely on international trade and imports for agricultural products in order to meet year-round consumer demand for a lot of these items," Ortega said.
The US can't grow some of the products domestically, such as bananas, or can only produce them seasonally, Ortega said. In many cases, it's cheaper to import food than to grow it domestically, largely due to labor cost differences, he said.
Similarly, though a small amount of coffee is grown in Hawaii, "we don't grow enough coffee domestically to be able to meet consumer demand," he said.
"So those things that are facing 10% tariffs, you will see the price go up," Ortega said.
He added that: "low-income households are affected the most since they spend a higher portion of their disposable income on food."
Some retailers may still increase the price of a product, even if the product itself wasn't subject to a tariff, said Chris Costagli, vice president and food insights lead for NielsenIQ.
Manufacturers have something called "industry price gap management," which is the comparison of the price of their product versus their competitor, Costagli said. Even if you're a completely US-based food product, "if all your competitors' prices are going up because they're affected by a tariff... you may raise your price," he said.
Additionally, a food product may have been made in the US, so it doesn't have a tariff levied on it, but the packaging or other ingredients to make the food may be imported, Costagli told USA TODAY. That could lead to a price hike.
In a NielsenIQ study in March, 81% of consumers surveyed said they were somewhat familiar with the effect of tariffs on grocery prices and 73% believed the tariffs would impact the price of groceries. The survey was conducted when tariff discussion was only surrounding Canada and Mexico and before the reciprocal tariffs were announced, then paused, and the hefty tariffs on China were implemented.
But keeping track of tariffs is confusing, especially as the tariff policies have changed.
There is a 25% tariff on goods from Mexico and Canada, unless they are products covered under an agreement called the United States-Mexico-Canada-Agreement (USMCA) and a 10% baseline tariff on all imported goods from other countries. There is a 145% tariff on goods imported from China.
When Trump first announced the tariffs, he said all goods, including those coming from Mexico and China and covered under the USMCA agreement, would be subject to the extra fees. But then the president backed off that decision, saying the USCMCA-covered goods would not be tariffed. Additionally, there was a 90-day pause on any reciprocal tariffs beyond the 10%.
Some agricultural and food products are covered under the USMCA, but it is difficult to distinguish which products are currently coming in with or without tariffs because there's an extra cost and hassle for importers to verify themselves under the USMCA, so some may just pay the tariff, Ortega said.
And many are having to wait and see what other tariffs might happen.
"I think a lot of people just have no idea what is tariffed and what isn't tariffed," Costagli said.
The US grows and produces a lot of food products and is a huge net surplus producer, which means "we need to take that product out to the global markets. We just produce too much of it," said Michael Swanson, Chief Agricultural Economist at Wells Fargo Agri-Food Institute.
We export about 15% of our poultry overseas and about 20% of our pork overseas, Swanson said.
"If we lost some of those markets, that would have to stay in the domestic market and could actually depress prices," he said. "So we might actually see pork and poultry prices come down as the market has to sell it in America first before they can reduce the supply on an ongoing basis," he said.
Consumers can try to save money by sticking to foods that are grown, produced, or manufactured in the US - and there's a lot of them, said Swanson.
There will still be some things that they will have to pay more for if there is no substitution or if they're not willing to trade for a different product, he said. For instance, champagne from the Champagne region of France or Parmesan cheese that only comes from Parma, Italy.
But there are growers of parmesan cheese in Wisconsin, and that product is cheaper than the Parma, Italy version.
Consumers may consider other substitutions like trying bourbon from Kentucky instead of scotch from Scotland, which could increase in price due to tariffs, Swanson said.
Here are some food products that could see price increases, due to tariffs, according to Ortega:
◾Bananas: nearly all bananas consumed in the US are imported (from countries like Guatemala, Costa Rica, Ecuador, Colombia, etc).
◾Coffee: Outside of Hawaii and Puerto Rico, the US does not grow much coffee. Tariffs would hit virtually the entire supply - we import coffee from Brazil, Colombia, Vietnam, and other countries.