While campaigning in Flint (MI), former President Donald Trump was asked how he would tackle rising food prices. In response, he suggested that import tariffs would do the job, and would also cut the deficit and boost job creation. He described trade tariffs as “the greatest thing ever invented,” presenting them as the solution to all these economic challenges.
His enthusiasm for tariffs is not new. It aligns with his previous economic policies, and he plans to double down on this approach if elected for a second term. He suggested up to 60% tariffs on Chinese imports and 20% on other foreign goods, with threats of even higher rates (200%) under particular circumstances, e.g. if John Deere moved to Mexico, regardless of NAFTA.
Trump’s tariff-focused economic approach has become a key point of debate in the lead-up to the next election, raising questions about its impact on jobs, prices, and international trade. Economists and industry experts warn that these measures would increase food prices and hurt American farmers and consumers.
Tariffs on Food Imports: Why Trump’s Plan Will Raise Grocery Bills for Americans
Donald Trump’s suggestion to reduce grocery prices by applying tariffs on food imports is misguided and will ultimately raise prices for American consumers. The lack of foreign competitors will ensure that Americans face higher prices and reduced options, reversing the benefits of globalization that have enriched supermarket shelves.
Diversity is due to global trade. According to the Food and Drug Administration (FDA), the U.S. import 55% of fresh fruits, 32% of fresh vegetables, and 94% of seafood, enabling Americans to enjoy out-of-season and specialty foods year-round at relatively low prices. Goods that were once considered rare luxuries are now affordable. The rise in international food trade began in the 1990s, after tariffs were cut by trade agreements such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization’s Agreement on Agriculture.
Plans to reinstate tariffs on imports would restrict access to products not easily cultivated in the U.S., and result in increased prices and less variety. The U.S. already impose tariffs and other barriers on numerous imported foods such as beef, seafood, and sugar, the price of which has risen. New tariffs will unlikely encourage foreign exporters to reduce their prices to balance the added costs, as Trump claims. Instead, U.S. businesses and consumers will face the consequences of higher grocery bills.
The Economic Costs of Trump’s Tariffs
The belief that tariffs protect American farmers and cut grocery prices is a misconception. Tariffs are taxes on imports that increase costs for businesses and prices for consumers. While Trump claims that they would benefit domestic farmers, they would actually drive up food prices, undermining the goal of affordable groceries.
Trump’s previous trade policies demonstrate the contradictions in his approach. Tariffs on Chinese goods have primarily impacted U.S. consumers and businesses, with U.S. grocery stores—operating on historically thin profit margins of around 2%—unable to absorb these expenses without passing them on to consumers. Simultaneously, American farmers suffered from retaliatory tariffs imposed by other countries. Farm sales to China dropped by more than half between 2017 and 2018, while farm bankruptcies increased by 20% by 2019. This situation led the government to provide record financial aid to farmers, illustrating the unintended consequences of protectionist trade policies on farmers and consumers.
Moreover, past protectionist measures failed to significantly boost U.S. employment in the targeted sectors, while foreign retaliation severely impacted jobs, particularly in agriculture. In fact, a 2021 USDA report estimated that removing tariffs on agricultural imports would improve U.S. consumer well-being by $3.5 billion annually.
Economists overwhelmingly agree that protectionist policies, such as tariffs, reduce economic output, limit consumer choices, and raise prices. In a recent Wall Street Journal survey of 39 economists, not one expert polled approved Trump’s plan to put tariffs on all imported goods. Many studies have estimated that these tariffs could increase annual households’ expenses by an alarming $2,600 to $3,900.
A recent study by the Peterson Institute for International Economics (PIIE) concluded that Trump’s proposed tariffs would likely increase prices by 2% and reduce U.S. economic growth by over 1% by 2026. Despite all this evidence and warnings, Trump maintains that his policies benefit Americans and will reduce food prices.
In conclusion, Trump’s protectionist approach to lowering grocery prices is flawed. The evidence overwhelmingly shows that consumers and farmers will pay a heavy price. The recipe to obtain affordable food is global free trade.
Photo by Laura Seaman
