In Chicago on January 31, U.S. consumers contending with steep prices for beef and eggs could potentially encounter further increases in costs for meat, vegetables, and fruit if President Donald Trump enforces tariffs on imports from Canada and Mexico, according to economists and food industry executives.
Consumers have been facing high inflation driven by the COVID-19 pandemic and discontent over rising prices. Trump promised to reduce expenses for average Americans.
The White House announced that the new tariffs on Canadian and Mexican goods would be implemented on February 1, refuting earlier suggestions of a delay until March 1.
The impending tariff-driven price hikes come at a time when beef prices are soaring, exacerbated by the loss of egg-laying hens due to bird flu. Cases of bird flu among dairy cows in California, the top milk producer, have also been reported.
Following his recent inauguration, Trump set a deadline of February 1 for imposing tariffs on imports from Mexico and Canada unless actions are taken to curb the flow of illegal immigrants and the dangerous opioid fentanyl into the U.S. He also proposed a 10% tariff on Chinese products over their involvement in the fentanyl trade.
According to David Cutler, a spokesman for the National Grocers Association, any rise in expenses due to tariffs would essentially act as a "food tax" on consumers, highlighting the impracticality of such a solution.
The Trump administration assures that their planned tariffs will not drive up prices in the U.S. Vice President JD Vance stated that consumer prices may eventually decrease but not immediately.
The U.S. heavily relies on its neighbors for food supplies, importing a significant amount of agricultural goods. In 2023, the U.S. imported $195.9 billion worth of agricultural products from worldwide sources, with Mexico and Canada alone contributing nearly $86 billion, representing 44% of the total.
Approximately 40% of fresh produce in U.S. food stores is imported, as indicated by the National Grocers Association.
Rob Fox, an economist and director of CoBank's Knowledge Exchange, emphasized the impact of potential inflation on fresh fruits and vegetables sourced mainly from Mexico and Canada due to tariffs, pointing out the challenge of swiftly replacing these products locally.
The USDA reports that around two-thirds of U.S. vegetable imports and half of its fruit and nut imports originate from Mexico. Notably, Mexico supplies close to 90% of U.S. avocados, up to 35% of orange juice, and 20% of strawberries.
David Ortega, an economist at Michigan State University, highlighted the inflationary effect arising from the looming threat of tariffs, causing food companies to scramble for alternative supply sources and drive up operational costs.
The uncertainty surrounding tariffs has prompted U.S. meat buyers to secure domestic or imported supplies before the tariff implementation date of February 1, potentially leading to a notable spike in U.S. beef prices if tariffs are enforced, according to industry experts.
Ground beef retail prices in the U.S. have surged, with prices hitting a record high in September. Despite these high prices, U.S. beef demand reached a 38-year peak in 2024, as increased imports and heavier cattle helped offset dwindling domestic herds.
Zimmerman, a senior animal protein analyst, warned that trade disruptions could introduce market volatility, especially at a time when beef prices are already elevated due to factors like low cattle inventories resulting from drought conditions and a lengthy process of raising cattle for slaughter.