President Trump on Friday rolled back tariffs on beef, coffee and other agricultural products as inflation concerns continue to plague U.S. restaurants, grocers and their customers.
The White House said that it would eliminate reciprocal tariffs on several products, including coffee, beef, certain fruits such as bananas, oranges and tomatoes, along with additional fertilizers.
The National Restaurant Association applauded the move. “This action delivers needed relief for restaurants and their customers at a time when food costs have risen nearly 40% over the past four years,” Michelle Korsmo, CEO of the association, said in a statement. “Restaurants depend on a steady, affordable supply of agreements year-round. While we prioritize U.S. sourcing, many products simply cannot be grown domestically due to seasonal and climate limitations.
“By eliminating tariffs on these goods, the Administration has taken a common-sense step to strengthen the food supply chain, reduce cost pressures and support menu innovation.”
The move comes as beef prices have plagued restaurant chains, due mostly to domestic supply restrictions rather than tariffs. Rising beef prices hit chains like McDonald’s, Burger King and Texas Roadhouse.
“We’re seeing very, very high inflation around beef prices versus what we’re used to historically,” McDonald’s CEO Chris Kempczinski told investors earlier this month. Tariffs could theoretically lower the prices of imports that could ease somewhat those high beef prices.
Coffee is more prone to tariffs than other commodities used by U.S. restaurant chains, as the product is largely imported. That has hit coffee chain profits.
Starbucks' operating margin contracted 500 basis points last quarter, “primarily driven by inflation, led by coffee prices and tariffs” as well as the chain’s “Back to Starbucks” plan, CFO Cathy Smith told investors.
U.S. restaurant chains source most of their products domestically, so tariffs have not had a huge impact outside of coffee chains, for instance, or brands like Chipotle that source a lot of avocados. Still, the tariffs have added to cost burdens that threaten to keep inflation at elevated rates.
Those high food costs promise to keep prices rising at restaurants and grocers as operators seek to recover those margins. But those higher prices have angered consumers, who voted for Trump at least in part because of his promises to reduce inflation.
Consumers have also cut back on their restaurant visits, particularly at fast-food chains, amid frustration over those prices. That has triggered a massive value war, with nearly three in ten visits now on some sort of deal.
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