The first few days of the Trump administration’s fully instated reciprocal tariffs on more than 90 countries have triggered price pressures and backlash. An additional, contentious, 50% duty on India is set for Aug. 27.
These tariffs are far from settled, however, as the administration revealed Monday that the sweeping tariffs on China have been delayed once again, meaning the two countries have until Nov. 9 to strike a deal.
“We hope that the U.S. will work with China to follow the important consensus reached during the phone call between the two heads of state … and strive for positive outcomes on the basis of equality, respect and mutual benefit,” a foreign ministry spokesman, Lin Jian, said in a statement.
Domestically, July CPI data from the Bureau of Labor Statistics suggests price increases have already come to shoppers, with inflation sustaining its highest annual growth rate since February, at 2.7%, unadjusted.
In the food space, although food-at-home experienced some relief, down .1% month-over-month (MoM) seasonally adjusted, food-away-from-home continues to grow, widening the gap between the two industries.
Tariffs affect F&B companies across the value chain, increasing the prices of raw ingredients, packaging, transportation, and labor, in turn affecting businesses’ bottom line.
Abroad, these tariffs continue to stoke anti-American sentiments. In India, officials and stakeholders are calling for boycotts of U.S.-made products, such as McDonald’s, Coca-Cola, and Amazon, echoing similar campaigns in Canada, reported Reuters.
This can threaten legacy businesses at a time when many are posting suboptimal quarterly results – the fate of both WK Kellogg and Wendy’s. The burger chain even trimmed its global sales forecast to drop 3%-5% this year due to economic pressures.
Tariff discussions continue among government officials – on Monday, President Trump delayed sweeping tariffs on China with an additional 90-day pause in the last hours before the previous agreement was due to expire. Now, China has until November to reach an agreement with the U.S.
Following is a list of U.S. tariffs affecting international imports.
Source: Flourish
Tariff’s Impact on Prices
Matthew Shay, CEO of the National Retail Federation, noted that summer sales and promotions edged up consumer spending ahead of the latest slate of reciprocal tariffs going into effect on August 7.
On the other hand, he suggests that retail findings from the monthly CNBC/NRF Retail Monitor could be charting the beginnings of tariff-related inflationary impacts. The platform calculates core retail sales movements using anonymized purchase data.
Source: Affinity Solutions via NRF
The report found that general merchandise stores were up 2.04% MoM, seasonally adjusted, and up 6.94% year-over-year unadjusted. This shows that these items outpace the retail market sales.
F&B shoppers likely saw nominal relief from food-at-home deflation that was then undermined by back-to-school shopping woes.
The shopping holiday financially burdened myriad consumers, with 56% of parents with children finding it financially stressful and 23% indicating they will use Buy Now, Pay Later services to afford their projected purchases, according to a report from The Harris Poll and NerdWallet. As a result, more shoppers engaged in “dupe shopping” across retail sectors, with roughly a third saying they intend to shop across various retailers and/or trade down to avoid tariff hikes.
This poll, published July 17, predates the slate of recent tariffs but portends additional problems ahead.
In a remark about recent inflation data from the Bureau of Labor Statistics, Gina Bolvin, president of Bolvin Wealth Management Group, told the New York Times that the results “delivered a mild relief rally… but with tariffs in play, investors should enjoy the calm while keeping an eye on the horizon.”
Global chairman of research at Barclays, Ajay Rajadhyaksha, however, is more optimistic about tariffs’ impact on inflation.
“You are starting to see tariff impact on the goods side, but it is also true that so far the impact every month has been a little bit less than you would expect,” he said.
The Food Institute Podcast
How will the One Big Beautiful Bill Act (OBBBA) impact your food business? Unraveling the implications of new legislation is never easy, but Patrick O’Reilly and Jeff Pera of CBIZ explain how provisions of the bill related to no tax on tips, depreciation and expensing of capital purchases, and research and development will impact the industry.
