On April 3, President Trump announced his latest and greatest round of sweeping tariffs. These tariffs impose a 10% baseline on all countries, while some nations are experiencing higher, as high as 50%. He’s also imposing reciprocal tariffs on about 60 nations.
In response, the stock markets tumbled, and the National Restaurant Association, which had been relatively quiet about Trumpeconomics, released a statement.
Michelle Korsmo, National Restaurant Association President & CEO, said, “Applying new tariffs at this scale will create change and disruptions that restaurant operators will have to navigate to keep their restaurants open. The biggest concerns for restaurant operators—from community restaurants to national brands—are that tariffs will hike food and packaging costs and add uncertainty to managing availability, while pushing prices up for consumers.”
And that was just the beginning. She went on to talk about the rising food costs and the inability of U.S. farmers and ranchers to keep up with consumer demand. The bottom line is that the association is asking the administration to exempt food and beverages from these tariffs.
According to the association, the previously imposed tariffs, including 25% on Canada’s and Mexico’s goods and 10% on China’s, would cost the restaurant industry $12 billion. With this new widespread declaration, the effects could be devastating.
An Impacted Supply Chain
So, what restaurant products will these new tariffs impact? The better question and shorter answer is what products won’t they affect. From furniture to coffee, packaging materials, and equipment, all will see volatility. Even restaurants that have embraced the local food arena will see changing prices as demand ramps up.
According to the National Coffee Association, the U.S. imports 99% of its coffee. Over 90% of our shrimp comes from overseas, including Ecuador, India, Indonesia, and Vietnam. The Yale Budget Lab believes that food prices will be “disproportionately affected,” with fresh produce experiencing a 4% increase due to all 2025 tariff actions.
The international law firm Harris Sliwoski suggested that the following goods and the restaurants reliant on them will see a significant impact.
–Wines from places like France and Italy and beers from Europe
–Ethnic and High-End restaurants that offer ethnic flavors and ingredients such as Asian spices and French cheeses
–Specialized cooking equipment and glassware
–Packaging
The Effects on Consumers
In addition to the direct price increases, these tariffs also affect our guests and their discretionary spending. Rising costs and associated rising inflation leave less in their pocketbook, a scenario we’re all too familiar with in recent years.
Restaurant’s Innovative Strategies
Many restaurants are looking at ways to embrace supply chain alternatives. For instance, they may procure olive oil from California growers instead of imported oil from Italy or Greece. NBC reported on New Delhi Restaurant in San Francisco, which imports a significant amount of their ingredients from India. Their reaction? They quadrupled their order, ensuring they have stock even after prices start to skyrocket.
Restaurants will undoubtedly be rethinking their beverage programs, steering toward domestic producers. But some products are just too unpredictable to call ahead of the changing markets. Will there be prohibitively expensive products? Probably. Will they need to find an alternative? Fairly quickly.
Some Good News…Sort of
NBC quoted UBS analyst Dennis Geiger, “We view the direct cost impact of tariffs on restaurants as manageable, with a focus on select commodity costs, but see the bigger risk as incremental pressure on consumer spending and industry demand.”
So, are we heading toward a recession? According to Restaurant Business, economists are leaning further in that direction, with J.P. Morgan Research increasing their odds for a recession to 40%. Goldman Sachs has increased their odds to 35%.
Does Trump have a rabbit up his sleeve? Or a potential change of heart?
We can only hope so.
