Trump Tariffs Will Raise the Cost of Food for Americans

On August 1, tariffs on US goods imports are scheduled to increase for more than 80 countries. With about 71 percent of US goods imports already facing President Trump’s minimum tariffs of 10 percent, much of the attention has focused on how tariffs will impact the manufactured goods sector. However, a variety of food imports are also impacted by the tariffs, and these will likely lead to higher food prices for consumers.

Tariffs on the food sector will have different impacts on the US economy compared to tariffs on manufacturing inputs and consumer goods. Consider, for instance, how a domestic manufacturer of soda could respond to a tariffTariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters. on aluminum. The firm could continue to source aluminum for its cans from abroad, paying the higher import price due to the tariff. Or it could switch to the now relatively cheaper domestic supplier of aluminum.

However, in the case of food imports, the ability to switch to a domestic producer is not always available. Take bananas, for example. In 2023, the US imported over $2 billion worth of bananas, mostly from Guatemala and other Central American countries. The US has a limited ability to produce bananas, with few locations possessing the proper climate. As land is a scarce resource, banana producers in Florida and Hawaii would not be able to expand banana production as easily to meet US demand. The end result is that a tariff on banana imports would simply lead to US consumers paying higher prices for imported bananas.

In the soda can example, consumers are generally indifferent toward the sourcing of raw materials. That is, there is nothing special about US aluminum compared to Canadian aluminum, and, in this scenario, consumers would be fine paying for the same soda can made with domestic aluminum, though soda prices would still go up to the extent US aluminum costs more than Canadian aluminum.

However, consider a product like Brazilian coffee, which, under Trump’s proposed reciprocal tariff regime, would face a tariff of 50 percent. To the extent that Brazilian coffee may have a unique flavor profile, US producers cannot simply make “Brazilian coffee” in the US. In this situation, some consumers may opt to simply pay the higher import price for Brazilian coffee rather than switch to another type.

In 2024, the US imported about $221 billion in food products, 74 percent of which ($163 billion) faced the Trump tariffs. While these imports currently face tariff rates ranging from 10 percent to 30 percent, they will exceed 30 percent for some countries if the reciprocal tariffs go into effect on August 1. The top five exporters of food products to the US, in order, are Mexico, Canada, the EU, Brazil, and China, accounting for 62 percent of total US food imports.

 

As USMCA-covered goods are exempt from the tariffs, about 63 percent of agricultural imports from Canada and Mexico can continue to be imported into the US tariff-free. The top five food imports that are exempt from the tariffs include baked goods, liqueurs and spirits, vegetable oils, beef, and various kinds of vegetables. Non-USMCA-covered food imports are facing tariff rates of 25 percent, which are scheduled to increase to 35 percent and 30 percent for Canada and Mexico, respectively, by August 1.

Accounting for those exemptions, the chart below shows the total food imports subject to the tariffs by country, with EU imports the most affected. The EU is currently facing a 10 percent tariff on food imports, which is scheduled to rise to 15 percent by August 1.

 

In terms of specific products, the top five food imports to the US facing tariffs, in order, are liqueurs and spirits, baked goods, coffee, fish, and beer, totaling $46.5 billion in 2024. These products accounted for about 21 percent of total food imports.

President Trump has often defended tariffs on the grounds that they will boost domestic production and create jobs. However, in the case of food imports, it is often difficult or impossible to onshore production due to land scarcity and a lack of suitable climates for certain goods. Consumers also often prefer the foreign alternative to American-grown products. This means tariffs on food imports will likely lead to higher food prices, making consumers worse off.

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