Consumers feel squeeze of tariffs

More companies blame trade war for rising prices and financial pinch

When consumers hear all the talk about tariffs, many may consider it an inside-the-Beltway issue that won’t reach their pocketbooks.

But increasingly, it looks like the impact of tariffs will show up at U.S. supermarkets with price changes that are both higher and lower, depending on the product. With pressure on farmers and producers mounting, everything from soda and beef to grains and dairy to poultry and soybeans to pork and booze is at risk.

Experts say the basic price threat is this: The cost of things you drink that come in cans will go up due to their packaging. But prices for meat and some other farm commodities could drop because farmers lost some of their overseas markets. For now, farmers may hold off and stockpile food that otherwise would be going to market, but they can’t hang on forever.

“You can stockpile for a while, but not indefinitely,” said Phil Lempert, founder of supermarketguru.com, a website tracking industry news and trends.

Even people who track prices carefully aren’t sure of the extent to which consumers will feel the pinch.

Food companies sell to retailers, so it’s up to stores to decide whether they’ll pass along the increases or swallow them. Coca-Cola, in announcing price increases to grocers because of tariffs last week, noted that it’s not sure if retailers will pass them on to consumers.

Here’s what you need to know about vulnerable industries:

❚ Dairy: While the U.S. has caused woe to its beer and soda industries with the aluminum tariff, which affects the cost of cans, it is suffering at the hands of other countries that have imposed tariffs on U.S. dairy products.

Mexico buys nearly a quarter of all dairy products exported by the U.S., and the American dairy industry is reeling from $387 million in Mexican tariffs of between 15 and 25 percent on cheese.

To U.S. customers, that could mean a price drop of up to 5 percent initially and then as much as 10 percent, according to Burt Flickinger III, managing director of

the Strategic Resource Group, a New York-based retail and consumer goods consulting firm.

❚ Beef, poultry and pork: Backlogs of meat will mean lower prices – at least at first. Grocery shoppers will see prices fall up to 5 percent initially, but it could max out at 12 percent, Flickinger said.

❚ Soft drinks: President Donald Trump’s 10 percent tariff on aluminum is forcing soda manufacturers to raise their prices. Coca-Cola CEO James Quincey called the tariffs “disruptive” for the company and its retailers. “But I think the conversations have been about how is this going to work for each and every customer,” he said.

❚ Beer: Like the soda industry, beer manufacturers also rely heavily on aluminum. About 60 percent of beer made and sold in the U.S. comes in aluminum cans or bottles. According to a March statement from the Beer Institute, brewers could be saddled with

$348 million in additional cost.

Some brewers have been forced to react already. Sam Adams brewer Boston Beer said in an earnings call last week that it would raise prices up by 2 percent in the second half of the year due to the tariffs.

❚ Bourbon: In response to U.S. tariffs, countries have enforced retaliatory tariffs of their own. One of the largest tariffs falls on bourbon, with both the EU and Mexico imposing duties of 25 percent. With the cost of bourbon increasing for international consumers, they are less likely to purchase the alcohol, analysts say. This will likely lead to a drop in profit for bourbon makers in Kentucky.

❚ Mixed (grocery) bag: High-margin items – such as breakfast cereals – will be able to withstand attacks on grain pricing, but foods with multiple ingredients – such as frozen dinners, won’t, Lempert said.

Also risking higher prices are fruits such as berries and avocados, he added. The U.S. grows some of the domestic supply, but it’s augmented by exported produce during the U.S. offseason.