What a week we’ve had! America has spoken, and Donald Trump is the new president-elect. Some people are happy and some aren’t, but here’s what we want to know: How will this change in office affect the food industry? The new administration is set to implement 10% to 20% tariff increases on imported goods. The idea of this is to encourage businesses to keep their shops on US grounds and boost the national economy. But the real question is, will this actually work?
Let’s break it down
Over the past few years, the US experienced what has been referred to as the highest inflation rate in the last 40 years. Earlier this year, the Federal Reserve released its Economic Well-Being of US Households report for 2023 and according to the results, inflation made the financial lives “worse” for 65% of US households. Among those, 19% said it was “much worse”. This was the Republican Party’s key point. Trump ran a campaign that promised to tackle that problem and end the “inflation nightmare”. To do this he proposed tax cuts to various groups and, to finance said cuts, he proposed new tariffs on imports. But hey, let’s explain this a little better.
This word that you probably heard a lot this week refers to taxes imposed by one country on goods imported from another country, that are then reflected on the final price of said products because it’s the importing company the one that pays, not the exporting one. Trump’s administration proposed adding a tariff of 10% to 20% on all imports and a levy of 60% -or more- on Chinese imports.
“To me, the most beautiful word in the dictionary is ‘tariffs’. It’s my favorite word.” said Trump last month to news agency Bloomberg.
Who will this affect?
Companies tend to pass along part of their higher costs to consumers through increased prices. Now, if this will help or rather affect the current US economy is a very split opinion: According to the National Retail Federation, these new fees will reduce Americans’ purchasing power by $78 billion, causing households to pull back spending. On the other hand, Ryan Sweet, Oxford’s chief US economist basically says this is just a threat that will likely scale down and really impose more targeted tariffs on countries like China, Mexico, Canada, and the European Union. Trump claims this will boost American manufacturing create jobs and bring in billions of dollars to help pay for his new policy initiatives.
What does it mean for the F&B industry?
Analysts and industry bodies overseas are already speaking about it and their opinion on the matter seems to be “expecting the worst, hoping for the best”.
“The big impact may, however, for all of us, be how the Trump government impacts global trade, geopolitics, and so stability or otherwise that is clearly manifested in economic terms in currency movements, commodity and energy prices, and the movement of people. Things are likely to change, but how, well who knows?” says Clive Black, a director at UK investment company Shore Capital.
Cyrille Filott, global strategist for consumer foods, packaging, and logistics at Rabobank in the Netherlands, said: “Trump will try and protect American workers and farmers from unfair trade, prioritizing domestic production and ensuring national independence in essential goods and services.”
Miles Beale, chief executive of the UK’s Wine and Spirit Trade Association, said: “There are some clear concerns inherited from President Trump’s first term, such as increased tariffs on wine and spirit products, and the sector becoming collateral damage in non-industry related trade disputes once again.
Keep pushing forward
In times of change like these, companies have more doubts than certainties. At Source86, our promise with clients to bring high-quality and certified ingredients to their businesses is a top priority. As we navigate these uncertain times we’ll stick to our mission: to do better for our customers, always. Contact our team and bring quality to your company, no matter the challenges.
