Tariff Update

By Adam Calder, Wheatsfield Produce Manager

Ever since the Trump administration began announcing the nearly daily changes on import tariffs, hardly a day goes by when I am not asked by a customer or co-worker about effect tariffs will have on the price of their groceries. There have already been some changes, and will be more to come.

During April, the wholesale cost of avocados, blueberries, cucumbers, limes, peppers and tomatoes went up the most. In May, costs are projected to rise .5%, or 2.6% comparing year-over-year. This is a bigger single-month cost increase than we have seen since the pandemic throttled supply chains. Products likely to be affected by this are butter, chocolate, eggs, juice and milk.

It is difficult to keep up with the current list of implemented and rescinded tariffs, as the changes are erratic and unpredictable. So far, there is still a universal 10% tariff on all goods imported from all countries outside the United States. In February, a 25% tariff was announced on aluminum products, then it was rescinded, now again it is implemented. This tariff will drive up the price on things packaged with aluminum.

The first round of shipments ordered when the tariff on China was 145% have been arriving during May. While this may not directly affect the price of our fresh produce, many deli packaging materials come from China. As warehouse supplies across the country begin to dwindle, and are replaced with these high-tariff items, price increases are likely to start happening while we move into the summer months.

Wheatsfield gets much fresh organic produce from California, and to a lesser extent Florida. Outside of those two states, most of it comes from Mexico, especially for items that are out of season. Even if only a 10% tariff remains on Mexican imports, this is still higher than the profit margin of many grocery stores and distribution warehouses. Take, for example, the largest grocery store in the country, the multi-billion-dollar behemoth that is Walmart, only has a profit margin of about 3%. A 10% tariff is three times larger than that profit margin.

We will do our best to manage these tariffs, and the associated cost increases. We are always on the lookout for more cost-effective packaging, local produce, distributor promotions and collaborative opportunities with product vendors so we can keep costs as low as possible.