Economists are worried that Donald Trump's proposed tariffs could push food prices even higher.
Trump promised to lower household expenses, but groceries have already become pricier. Rising costs stem from geopolitical tensions, weather issues, supply chain disruptions, and inflation.
Inflation has slowed, with October seeing a 2.6% rise. Yet grocery prices remain 20% to 25% higher than four years ago.
The proposed tariffs include a 10%-20% hike on imports from all countries and a 60%-100% increase on Chinese imports. Food economist David Ortega warns that shoppers will feel the pain. Trump also announced plans for a 25% tariff on Canadian and Mexican imports on his first day back in office.
Low-income families spend a bigger chunk of their income on food. Ortega explained they might have to cut back on essentials like housing, health care, or transportation to afford groceries.
“Tariffs drive up costs domestically by increasing production expenses and cutting competition,” Ortega said. “These higher costs fall hardest on low-income households.”
Karoline Leavitt, a Trump-Vance spokeswoman, argued that tariffs during Trump’s first term created jobs, encouraged investment, and didn’t cause inflation. She said Trump aims to fix the economy by bringing back American jobs, reducing inflation, and lowering taxes.
However, Duke University economist Felix Tintelnot said broad tariffs leave little room for workarounds. In 2018, tariffs on washing machines and steel led to significant price hikes for consumers.
Food costs wouldn’t be the only impact. Tariffs would also raise prices for fertilizer, farm equipment, and other food production inputs. Domestic producers could follow suit, raising their prices to match the imported goods’ increased costs.
Ortega also cautioned about retaliatory tariffs from other countries. “Recent history shows us that other countries won’t sit back quietly,” he said.
He pointed to the U.S.-China trade war six years ago. China’s retaliatory tariffs hurt American farmers, leading to over $27 billion in reduced agricultural exports, according to the Agriculture Department. Nearly all the losses were due to China’s countermeasures.