Trump’s tariff threats: a hard swallow for global food industry

Yet most analysts have said that tariffs—even his "baseline" 10%—usually mean higher prices, because companies usually pass their additional costs on to the consumer. The Budget Lab at Yale University said food prices would be "disproportionately affected", rising 1.6% from the 2 April tariffs and 2.8% from all 2025 tariff actions. Fresh produce would increase even more, it noted, up 2.2% and 4.0% respectively.

The Lab had earlier analysed the effects of a broad 20% tariff on food prices, concluding that they would rise by 3.7%, "about double the recent rate of grocery inflation". But Trump has followed no discernible script, applying punitively high tariffs on China (145% at the time of writing), which is also a source of food imports for American families.

"Prices are going to go up, there is no doubt about it," said Phil Lempert, a food analyst speaking to CBS News. He pointed out that the US imports around $27bn of fruit and $20bn of vegetables annually. 

Import impact

Big American import goods include coffee, but some of the largest coffee-producing nations had initially been hit with some of the highest tariffs, such as Vietnam (46%), Indonesia (32%), and India (26%). The 90-day pause gives time to rethink supply chains, but prices will still inevitably increase, given the new "baseline". 

This could be a serious blow to businesses in the country, according to the National Coffee Association. "Every dollar of coffee-related imports generates $43 in value for the American economy, and coffee supports 2.2 million US jobs," it said.

The White House says tariffs will strengthen the US economy in the long run by encouraging local production, but the US simply does not have the climate necessary to grow coffee or food items demanded by American consumers, such as rice, cocoa, vanilla, or many spices.

In some categories, US-made products compete with those from abroad, with seafood, garlic, apple juice, beer, wine, and cheese among them. Economists doubt whether US-made products will stay cheap if foreign products become more expensive, arguing that local producers may see an opportunity to increase their prices—and their profits. 

There is also a risk of shortages, given that local production may not be enough to cover the supply shortfall in the market. John Lowrey, a Northeastern University expert on supply chains and food pricing, used the example of strawberries to explain why. 

The US imports around 60% of the strawberries it consumes, but tariffs could cause this to fall, reducing the availability of strawberries, which in turn would push prices up, while at the same time reducing Americans' choice. "The net effect is that we will be more reliant on domestically produced, in-season varieties," Lowrey said.

Hitting producers

Tariffs will hit both food consumers and food producers in the US, to say nothing of producers elsewhere in the world. American farmers get more than 90% of their potash (fertiliser) from abroad, with 85% coming from Canada. Yet other countries have threatened Trump with reciprocal tariffs, so American farmers' profits would suffer, too.

Minnesota Senator Amy Klobuchar, the top-ranking Democrat on the Senate Agriculture Committee, said: "These across-the-board tariffs will make it harder for Americans to put food on the table and will squeeze farmers who will lose valuable export markets and see higher input costs." 

The Invesco Food and Beverage index lost more than 7% of its value following the 2 April tariff announcement, before recovering after the pause. Firms that rely on imports would be hit hardest. American beer brewers, for instance, need aluminium for their cans.

Coffee chain Starbucks said it would honour its pledge not to hike prices in 2025, but many grocery stores across America are small, family-run businesses whose model may no longer be viable with tariff-induced price hikes. 

The US Chamber of Commerce has warned of the "real, devastating impact on thousands of small businesses". Matt Weyandt, co-founder of a small batch chocolate maker in Atlanta, said the additional 10% for cocoa beans comes on top of already elevated prices. "This is not going to bring cocoa farming jobs to the US or increase American manufacturing. It's just going to hurt American chocolate manufacturers."

Global food fight

According to the US Department of Agriculture, 63% of American agricultural exports went to markets in East Asia and North America from 2020-24. Besides China, Japan and South Korea make up a significant chunk of these markets. Both were hit with high tariff rates (before the 9 April pause), and both may choose to retaliate in kind. 

Around the world, leaders are moving cautiously, waiting for the dust to settle. Canada, for example, recognises that its food security is intricately connected—through a few large corporations—with US supply chains. 

Elsewhere, the European Union initially offered Trump a "zero-for-zero" tariff deal, but then agreed to a 25% retaliatory tariff against food items from the US, such as almonds, orange juice, poultry, and soybeans. In the end, Brussels excluded items like bourbon and wine from the list, after Trump threatened a 200% counter-tariff if it did not.

China is perhaps where food will take the biggest hit from a trade war with the US, but Beijing has not been afraid to retaliate. US imports (into China) of poultry and wheat were hit with a 49% tariff, while soybeans and pork had a 44% tariff applied. 

"Pressure, threats, and blackmail are not the right ways to deal with China," said a Chinese Foreign Ministry spokesman. "China will surely take necessary measures to resolutely safeguard its legitimate rights and interests."

With the world's food security now seemingly subject to the whims of an impulsive US president, many will be using this 90-day higher tariff pause to plan. American households hoping for lower food and drink prices can only wait and see. In the meantime, they have more than enough reasons to PANICAN.