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Skip these groceries to save money under Trump's tariffs

Wine and liquor imports are still facing tariffs, even after Trump paused much of the latest round of import taxes.
  • Trump's tariffs on imports may raise prices for groceries like coffee and seafood.
  • Most US fresh fruit, coffee, and seafood are imported, and much of it faces 10% tariffs.
  • Canada and Mexico are exempt from certain tariffs, providing a buffer for some US imports.

President Donald Trump promised to make Americans' grocery bills more affordable. But his sweeping tariffs on imports of everyday staples like fresh fruit, coffee, and seafood are expected to raise prices, food industry analysts and retailers said.

Most of the fresh fruit, coffee, and fish Americans consume are shipped from overseas including Peru, Chile, and Indonesia, federal data shows. Meanwhile, France and Italy are among the top suppliers of wine to the US market. Vanilla, a key ingredient in pastries and other sweets, mainly comes from Madagascar.

On April 2, Trump, on what he called "Liberation Day," announced a 10% baseline tariff on imports from nearly all countries. Some countries were hit harder than others, including a threatened 20% tariff on the European Union and a 46% tariff on Vietnam.

The stock market plummeted, and Trump on April 9 announced a 90-day pause on those steeper tariffs — except on China, which faces an even higher 145% rate — but kept a 10% tariff intact on most other countries.

"A 10% tariff is still likely to pose inflationary pressures on food prices, but with much less intensity and speed than the much higher rates included in the country-specific tariff list," Andrew Harig, vice president of tax, trade, sustainability, and policy development at the Food Marketing Institute, a trade group representing grocery chains and food manufacturers, told Business Insider.

Harig added that while the 90-day pause is a good thing for retailers and consumers, the ongoing uncertainty over US trade policy will be challenging for them to navigate.

"For a company to change where they source product, they really need to know what the market is going to look like on a broader time horizon than three months," Harig said.

White House spokesman Kush Desai said in a statement that "Chicken Little 'expert' predictions" didn't pan out during Trump's first term and will not during his second term when the president "again restores American Greatness from Main Street to Wall Street."

Before Trump's trade battles, grocery staples like eggs, coffee, and olive oil had already become more expensive over the last five years due to a combination of a bird flu outbreak, supply chain disruptions from COVID-19, weather disasters in some countries, and broader inflation.

Fresh fruits like bananas, pineapples, and avocados could see price hikes quickly because they don't have a long shelf life. Suppliers can't build up large inventories of produce and try to sell them later if prices rise due to tariffs.

For packaged foods, it could be months before costs go up. How much depends on whether importers, manufacturers, and retailers spread out the additional cost hikes, Harig added.

He said one silver lining is that agricultural and other goods from Canada and Mexico that comply with those countries' free trade agreements with the US are exempt from higher tariffs. Most of America's fruit and vegetable imports come from them, and Canada is also a top supplier of fish.

Here are five grocery items that likely will be more expensive:

Coffee

The US relies on Brazil, Colombia, and several other Central American countries for much of its coffee supply. These countries, as well as Kenya and Ethiopia, are now facing 10% tariffs.

"Coffee is seasonal, so at this time of year, coffees from Ethiopia and Kenya are in some stage of transport," Noah Namowicz, chief operating officer and partner at Cafe Imports, a Minneapolis-based company that sources coffee from 24 countries, told BI. "They will be subject to these tariffs, in addition to most Central American coffees."

Coffee growers in Peru and Brazil typically start shipments in August and September.

Namowicz said the coffee industry was already experiencing unprecedented cost increases this year due to drought in Brazil and a typhoon in Vietnam that shrunk production. Adding tariffs to the equation exacerbates the costs.

"Ultimately, the average cup of coffee or a bag in stores in cafés is going to increase," Namowicz said.

He added that the US produces some coffee in Hawaii and California, but the climate is not ideal for growing coffee elsewhere in the country.

Bananas and broccoli

Mexico and Canada are the top suppliers of US fruit and vegetable imports overall, and most agricultural goods are exempt from Trump's new tariffs.

However, federal data shows that Guatemala, Ecuador, and Costa Rica are leading exporters of bananas. Guatemala is also the third-largest exporter of fresh and chilled broccoli and cauliflower to the US.

Bananas are the most popular fruit in the US, but the majority are imported. While broccoli and cauliflower are grown in California year-round, it isn't enough to meet all of the US demand.

Wine

Wines and all other products imported from France and Italy — the two largest suppliers to the US — will be hit with 10% tariffs. Wines from Argentina, Chile, and New Zealand will likely be more expensive, as well.

"Previously, when the cost of those wines went up, consumers switched to California wine," Harig said. "But then sometimes you see those costs go up, too, because there's more demand. So it creates a little bit of a counterintuitive result."

Harig said wine has a many-step distribution process, including shippers, receivers, brokers, and distributors. Each player may absorb some of the tariff increases to limit the impact on consumers.

Seafood

The US relies on other countries to feed Americans' growing appetite for seafood. About 80% of US seafood comes from abroad.

India, Ecuador, Indonesia, and Vietnam are the top suppliers of shrimp — the most popular seafood in the US — while Chile and Norway export a lot of farmed salmon.

Do you have a story to share about how the tariffs are affecting your finances or business? Email this reporter at cboudreau@businessinsider.com.

Read the original article on Business Insider
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