Escalating Trade War Causes Projected Grocery Price Hikes under Trump Administration
Rewritten Article:
Navigating life today can be a budget-buster. The lingering fallout from the pandemic, Russia's invasion of Ukraine, escalating fuel and energy prices, and extreme weather disrupting supply chains have combined to make everyday essentials less affordable for many. Rising food prices, specifically, have become a significant burden for millions of American households. While overall inflation has eased from its peak in 2022, food prices have climbed approximately 25% over the past four years and are forecast to keep increasing.
In 2023 alone, U.S. consumers have faced a nationwide bird flu outbreak, causing the cost of eggs to hit an all-time high, while surging temperatures and unpredictable rainfall in Western Africa have pushed chocolate prices to new heights. Long-term drought in the U.S. has resulted in historically low cattle inventories, pushing beef prices skyward, leading to soaring supermarket bills, tighter household budgets, and reduced food accessibility.
President Donald Trump's latest trade decisions aren't likely to improve the situation. Among a flurry of announcements on federal funding freezes, program terminations, and mass layoffs, the president has been enacting and rescinding tariffs on goods from major trading partners like Mexico, Canada, and China. In the space of a week, he imposed blanket tariffs on goods from Mexico, Canada, and China, suspended some products under the United States-Mexico-Canada Trade Agreement, and then doubled tariffs on China before threatening additional tariffs on Canadian products. On Tuesday, he ordered his administration to double duties on Canadian steel and aluminum imports, which subsequently went into effect Wednesday morning, prompting immediate retaliation levies from Canada and the European Union.
The erratic nature of Trump's trade policies, as explained by economists, means consumers are likely to see higher grocery store prices. It has already unsettled financial markets, and major retailers such as Target's CEO Brian Cornell have warned that if some of the proposed tariffs are implemented, customers could experience shocking price increases for fresh produce "within days."
"When it comes to extreme weather shocks, which are wreaking havoc on our supply chains, climate change is contributing to inflation and food price increases," said agricultural economist Seungki Lee at Ohio State University. If policymakers fail to adjust trade policies while considering the impact of climate change, it could result in a compounding effect of tariffs and climate-related supply chain disruptions on grocery costs.
Tariffs, or taxes imposed on imported goods from other countries, are normally a tactic used in international trade negotiations, with consumers and producers bearing the brunt. Imported goods are taxed as a percentage of their value, which is often passed on to consumers. In the case of something like fresh fruit imported from Mexico, the cost is typically passed on to everyday people. Given the U.S.'s reliance on Canada, Mexico, and China for agricultural trade, farmers, analysts, business leaders, policymakers, and the general public have expressed concerns about the impact of tariffs on grocery store prices and the potential for trade wars slowing economic growth.
During Trump's first term, tariffs on China led to retaliatory tariffs that crippled agricultural exports and commodity prices, resulting in losses exceeding $27 billion for the U.S. agricultural industry, which the government covered through subsidy payouts. To this day, the U.S. has still not fully recovered its market share of soybean exports to China, its largest agricultural export market. An analysis by the National Bureau of Economic Research found that the trade war with China in 2018 was primarily passed through as increases in U.S. prices, reducing consumers' income by approximately $1.4 billion per month. Rural agricultural sectors in the Midwest and mountain west were hit harder by China's retaliatory tariffs, the analysis concluded.
This time around, Trump appears to have upped the ante, though his demands and the messaging of his tariff policy have remained inconsistent, earning him the nickname "agent of chaos and confusion." Together, China, Canada, and Mexico supplied about 40% of the goods the U.S. imported last year. In 2023, Mexico alone accounted for about two-thirds of the vegetables imported to the U.S., nearly half of fruit and nut imports, and around 90% of the avocados consumed nationwide.
Estimates suggest that the tariffs Trump imposed last week could result in an additional yearly tax burden of anywhere between $830 and $1,072 per U.S. household. "I'm a little concerned about the increase in tension," said Lee. "It could cause immediate shock in supermarket prices."
Canada and China have retaliated with tariffs of their own. Canada's tariffs amounted to nearly $21 billion on U.S. goods, including orange juice, peanut butter, and coffee. China imposed 15 percent levies on wheat, corn, and chicken produced by U.S. farmers, as well as 10 percent tariffs on soybeans, pork, beef, and fruit, which took effect on Monday. Meanwhile, Mexico announced retaliatory tariffs but instead celebrated Trump's decision to delay them. In response to Trump's steel and aluminum tariff hike, Canadian officials announced a second $20.7 billion wave of duties, and the European Union declared it would initiate retaliatory trade action next month for a range of U.S. industrial and farm goods, including sugar, beef, eggs, poultry, peanut butter, and bourbon.
With Trump's planned tariffs, Americans can expect to see the price of fresh produce, such as tomatoes, strawberries, avocados, limes, mangoes, and papayas, along with certain types of tequila and beer from Mexico, to increase. Other agricultural products sourced from Canada, including fertilizer, chocolate, canola oil, maple syrup, and pork, are also likely to see cost increases. New duties on potash, a key ingredient in fertilizer, and steel used in agricultural machinery coming from Canada could also indirectly raise food prices. Numerous products, such as avocados, vegetable oils, cocoa, and mangoes, are already experiencing escalating price tags due to rising temperatures.
Although there are many questions about Trump's tariff policy at present, agricultural economist James Sayre at the University of California, Davis, points out that even this current state of international trade uncertainty will likely lead to a higher grocery cost burden for consumers.
"All of this uncertainty is really tough for businesses looking to import, establish new supply chains abroad, or make large-scale investments," said Sayre. "Even with tariffs alone, it will increase prices for consumers and limit consumer choice at the supermarket."
Meanwhile, climate change continues to fuel food inflation, leaving American consumers to shoulder the cost of our warming world and the ripple effects of an administration that seems intent on disrupting global trade relations.
"It's a bit challenging to predict what we can expect from the current administration when we are dealing with the burden of food inflation caused by tariffs and trade, as well as concurrent climate-related shocks to the supply chain," said Lee. "One can only hope there won't be an unforeseen compounding effect from these two very different factors."
This article was previously published by Grist at [Grist's Article Link]. Grist is a nonprofit, independent media organization dedicated to telling compelling stories about climate solutions and a forward-looking future. Learn more at Grist.org.**
- The ongoing inflation, particularly in food prices, has been attributed to climate change, escalating approximately 25% over the past four years, and it is forecast to continue rising.
- In the future, consumers may face higher costs for fresh produce due to President Trump's tariffs on goods imported from Mexico, Canada, and China, with potential increases in avocados, tomatoes, strawberries, and certain types of tequila and beer.
- Apart from the tariffs, climate change has been causing supply chain disruptions, contributing to inflation and food price increases, such as surging temperatures affecting the price of chocolate and long-term drought leading to increases in beef prices.
- Despite the uncertainty surrounding trade policies and climate change, it is hoped that there will not be an unforeseen compounding effect from these two factors, as American consumers are already shouldering the burden of food inflation caused by both tariffs and trade disruptions, as well as the ripple effects of climate-related shocks to the supply chain.