Navigating the Tariff Storm Part V: Tariffs at the Table

By Dave Teeple and Daniel Hyla

Navigating the Tariff Storm Part I

Navigating the Tariff Storm Part II

Navigating the Tariff Storm Part III

Navigating the Tariff Storm Part IV

Tariffs are steadily eating away at the patience of both businesses and consumers, as policy uncertainty continues to cloud the economic outlook. Economists have recently warned of the potential for stagflation—a unique economic condition marked by slowing growth and rising inflation¹. Historically, economic slowdowns triggered by higher prices have led to shifts in consumer spending, especially in Food and Beverage (F&B). As consumers are trending to become more conscious about spending, cooking at home becomes more widely adopted².

While the COVID-19 pandemic was a unique and unprecedented event, it revealed how quickly consumer habits can shift in response to external pressures. During that time, grocery store sales spiked, while restaurant revenues plummeted, as households overwhelmingly turned to at-home meal preparation. Though today’s environment is being shaped by sweeping tariffs, the behavioral response may be similar. Consumers are delaying non-essential purchases, changing to more affordable brands, looking for discounts wherever available, and even stockpiling items³. This evolving consumption pattern brings scrutiny to the broader Food & Beverage (F&B) supply chain, especially the role of imported goods that support year-round access to fresh foods.

The F&B industry today relies largely on domestic production. However, the past few years have seen a noticeable uptick in imports, driven by rising demand for fresh foods that cannot be grown year-round in the U.S.—most notably, fruits and vegetables. American consumers expect fresh produce to be available in all seasons, but domestic growers are limited by colder winter and more volatile climates. To meet this demand, suppliers increasingly rely on countries in Central and South America, where warm weather enables year-round cultivation. Lower labor and land costs in these regions also offer a cost advantage, making imported produce a viable and often preferable option for U.S. retailers. In addition, for some items like spices, importing may be the only practical option. While the main goal of the tariffs remains to reduce or eliminate the trade deficit, many think that the F&B industry should be treated independently. Cathy Burns, the CEO of the International Fresh Produce Association adds, “Providing exemptions for fresh produce and florals, alongside regulatory reform and a secure agricultural workforce, is the best path forward to supporting American growers, businesses, and consumers.”

Yet tariffs aren’t just impacting perishables. Another essential but often overlooked area of the F&B sector is steel and aluminum, both of which play a critical role in the packaging of non-perishables—including canned vegetables, pet food, and soft drinks. The U.S. imports approximately 70% of the steel used by manufacturers to produce these goods⁴. On June 3^rd, the Trump administration announced a doubling of tariffs on steel and aluminum, raising them to 50%⁵, adding substantial pressure to manufacturing costs across the sector. Businesses now face a difficult choice: absorb these rising costs internally or pass them on to consumers.

For supply chain leaders, proactive planning and understanding opportunities to increase agility are paramount. Rather than taking a wait-and-see approach, organizations should begin scenario modeling around potential tariff impacts. This includes seeking out alternative sourcing options, revisiting network strategy tactics, and evaluating locations of warehouse and distribution centers. Businesses should also reexamine contracts, revisit inventory strategies, and engage in cross-functional planning between procurement, finance, and operations to ensure alignment. Tariff-related disruptions may continue to evolve, but companies that take early, data-driven action will be better positioned to absorb shocks, maintain cost competitiveness, and preserve customer loyalty in an increasingly volatile market.

Let Sedlak assist you in addressing these challenging times. With over 65 years of experience advising industry leading organizations, Sedlak will help address the challenges of today and prepare you for an ever-evolving future. Reach out to Dave Teeple at dteeple@jasedlak.com or Daniel Hyla at dhyla@jasedlak.com for more information.

Don’t forget to register for our upcoming virtual event! Revolutionizing Supply Chains: The Power of Swisslog Goods-to-Person Warehouse Automation – A Sedlak Virtual Event is scheduled for Wednesday, June 11^th.

Sources

1. The Fed Forecasts Stagflation – www.wsj.com
2. Consumers expected to spend 7% less on restaurants this summer – restaurantdive.com
3. How Tariffs Shape Consumer Behavior and Brand Loyalty – Omniaretail.com
4. Trump’s steel and aluminum tariffs could drive up grocery costs – marketplace.org
5. Adjusting Imports of Aluminum and Steel into the United States – whitehouse.gov