Restaurants Warn of Potential $12 Billion Hit From Trump Tariffs

The US trade group for restaurants has raised concerns about the potential impacts of tariffs proposed by President Donald Trump. The National Restaurant Association is advocating for the exclusion of food and beverage products from these tariffs, warning that they could significantly affect the industry’s financial health.

According to the association, the application of these tariffs, particularly on products imported from Mexico and Canada, could lead to losses exceeding $12 billion for the restaurant sector. They argue that such levies would force restaurant owners to increase their menu prices, impacting consumers who are already facing rising costs in other areas of their lives.

Impact on Restaurants

In their communication to the president, the association highlighted the already thin profit margins in the restaurant industry, which average around 3% to 5%. They stated that if tariffs were implemented, companies would have no choice but to pass on the increased costs to customers, potentially leading to a further decline in dining out.

The letter emphasized that food products are vital to the restaurant operations and do not significantly contribute to the trade imbalances that the tariffs aim to resolve. They expressed concern that tariffs would disproportionately affect their sector and restrict growth opportunities.

The group mentioned that food costs represent about one-third of every dollar earned by restaurants. Therefore, introducing a 25% tariff could correspond to an estimated 30% drop in profits for small restaurant operators, which many are already struggling to maintain.

Challenges Facing the Industry

Restaurants have struggled in recent years to draw in customers due to inflation and shifts in consumer spending preferences. Many dining establishments have introduced value menus as a strategy to attract budget-conscious customers, yet the overall economic climate remains challenging.

Joe Pawlak from food service consulting firm Technomic noted the limited flexibility many restaurants have to adjust prices due to current economic pressures. This sentiment reflects the broader difficulties faced within the industry as they seek to stabilize their business amidst fluctuating costs.

restaurants, tariffs, economy