U.S. Tariff Impacts on Food Prices

By Karl Plume, Tom Polansek, and Renee Hickman

CHICAGO (Reuters) – U.S. consumers struggling with soaring beef and egg prices may face even higher costs for meat, vegetables, and fruit if President Donald Trump implements tariffs on Canadian and Mexican imports, economists and food industry executives warn.

Consumers have dealt with high inflation since the COVID-19 pandemic and partly voted for Trump due to dissatisfaction with rising prices. Trump has pledged to reduce costs for everyday Americans.

On Friday, the White House confirmed that the new tariffs on Canada and Mexico will commence on February 1, countering reports that they would be delayed until March 1.

Tariff-induced price hikes would hit consumers’ wallets as beef prices reach near-record levels and egg costs increase following bird flu outbreaks that have eliminated millions of egg-laying hens. Milk production has also been affected by bird flu cases in dairy cows in California.

Shortly after his inauguration last week, Trump set the February 1 deadline for imposing 25% tariffs on imports from Mexico and Canada unless these countries take action to curb illegal immigration and the flow of fentanyl into the U.S. He also announced a 10% tariff on Chinese goods due to their involvement in the fentanyl trade.

David Cutler, a spokesman for the National Grocers Association, remarked, “Any increase in expenses in the form of a tariff subsequently serves as a ‘food tax’ on consumers for imported products and is not a workable solution.”

Importers, not exporters, pay tariffs, often passing costs to consumers or facing reduced profits. The Trump administration claims the planned tariffs won’t raise U.S. prices, with Vice President JD Vance asserting that consumer costs will eventually decrease, but not immediately.

Tariffs may expose the dependencies of the U.S. on its neighboring countries for food supply. In 2023, the U.S. imported $195.9 billion in agricultural products globally, including $86 billion from Canada and Mexico, which together account for 44% of total imports.

According to the National Grocers Association, 40% of fresh produce sold in the U.S. is imported. Economist Rob Fox stated, “We import most of our fresh fruit and vegetables from Mexico and Canada, so you will definitely see inflation on those products. These are products that are not easily replaced. I can’t go out and plant tomatoes in Illinois in January and hope to replace them.”

The USDA reports that two-thirds of U.S. vegetable imports and half of fresh fruit/nut imports originate from Mexico, including nearly 90% of avocados, 35% of orange juice, and 20% of strawberries.

Alvaro Luque, CEO of Avocados from Mexico, noted that they shipped 52 to 53 million pounds of avocados weekly to the U.S. in December, which increases to over 70 million pounds ahead of the Super Bowl on February 9, highlighting American demand.

David Ortega, an economist at Michigan State University, emphasized that the mere threat of tariffs could inflate prices. “Food companies are scrambling to formulate contingency plans for sourcing products, which adds operational costs,” he explained.

Higher Beef Prices

The U.S. usually imports over 1 million cattle from Mexico each year, but shipments have been halted since late November due to a pest discovery in Mexico. Canadian cattle are also shipped to the U.S. for fattening and slaughtering. Analysts indicate that tariffs or trade disruptions could affect a range of beef products.

Bob Chudy, a consultant for beef importers, noted that uncertainty regarding tariffs has prompted U.S. meat buyers to secure domestic supplies or imports before February 1. “If it goes through as threatened, it will definitely push U.S. beef prices significantly higher,” he warned.

According to the Bureau of Labor Statistics, retail prices for ground beef hit a record high of $5.67 per pound in September and remained slightly below that last month—42% higher since four years ago.

U.S. beef demand reached a 38-year high in 2024 despite record prices, according to Lance Zimmerman, senior analyst at RaboResearch Food & Agribusiness. Increased imports and heavier cattle weights have compensated for declining domestic herds, which have plummeted to historic lows after drought reduced grazing land. Raising a beef cow to readiness for slaughter takes about two years.

“Beef prices are high right now, and trade disruptions can introduce chaos into the markets,” Zimmerman remarked.