Poor Man Survival

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Tariffs shopping list: What grocery prices will go up – or down

 

A farmer in Nebraska says he fears long-term problems lie ahead amid trade disputes between the U.S. and other countries. The U.S. Department of Agriculture on Tuesday announced a $12 billion plan to pay farmers hurt by the trade battles.

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 is at risk for changes.

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 as 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.

Some retailers have more leverage than others. Giants such as Walmart, which got into a pricing dispute with Campbell Soup over its expansive line of brands, have more leeway to go back to hammer manufacturers, letting themselves and their shoppers off the hook.

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 American 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 down fall up to 5 percent initially, but it could max out at 12 percent, Flickinger said.

"There's oversupply and insufficient demand in the U.S. to consume the oversupply and contracting export markets," he said.

Soft drinks

President Donald Trump’s 10 percent tariff on aluminum, which he signed in March, 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.

Coca-Cola has not disclosed the specifics of these U.S. price increases, as they vary by retailer, a company spokesman 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.

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. 

The U.S. hiked tariffs on Chinese imports Friday. Beijing has said it would be forced to counterattack. China could put higher tariffs on a number of U.S. goods including soybeans, whiskey [China does not consume much US whiskey] and pork.  China has always had higher tariffs on our products.

 

The big lesson-we should never be dependent on CHINA for ANYTHING and go back to our roots and become self sufficient, produce our own goods and.  China is our biggest threat, both economically and militarily as I’ve frequently pointed out here – THEY ARE MORE OF A DANGER THAN RUSSIA AND YET CONGRESS DITHERS AS USUAL.

 

Sen. M. Rubio [R. Fl] came out and ripped his fellow politicians this week over their lack of concern over China’s growing threat and mirrored what I’ve written about for more than a year.  China should be our primary focus.  They have taken the lead in international affairs, Africa, the South China Sea, etc. and that should be a major, major concern.  Its premier has essentially declared himself a dictator for life in his country without opposition and not one eyebrow in the western press was raised.

 

 

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Additional Resources

 

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