The U.S.-China trade war and resulting new tariffs have affected the grocery industry both positively and negatively, and future effects remain to be seen. “The Impact of U.S. Tariffs on the Grocery Industry,” a report from Acosta, Jacksonville, Fla., reveals how tariffs influenced grocery item prices since late summer and shares the perspectives of consumers, manufacturers and retailers.
“Tariffs are already impacting the average consumer, and are expected to escalate. U.S. tariffs imposed on China have cost the average American household $600 per year, and that impact is expected to rise to $1,000 per year if the late 2019 tariffs take effect,” says Colin Stewart, executive vice president, business intelligence. “It’s a difficult situation for manufacturers and retailers as well. Manufacturers are at the mercy of government decisions, and it is creating friction between manufacturers and retailers as to who will bear the costs of price increases.”
The report highlights the following:
Impact on shoppers
- Shoppers are already paying more for various grocery items, including 6% more on pork, 5% more on yogurt and writing tools/supplies and 4% more on fruit.
- Most consumers (40%) view tariffs as a negative for the country.
- Most shoppers are worried about price increases — only 11% of consumers reported not being concerned about tariffs making products more expensive.
- Seven in 10 shoppers believe tariffs have increased prices on everyday grocery products.
- The impact on manufacturers is highly dependent on the product line, sourcing and manufacturing location. CPG companies with U.S.-based manufacturing are gaining an advantage.
- Providing adequate notice to retailers for price increases can be a struggle due to being at the mercy of government decisions, which often occur with limited or no notice.
- The level of willingness to accept price increases varies by retailer. Many expect manufacturers to bear the cost.
- Most retailers compare potential price increases to their commodity costs on their private label items.