Americans continue to grapple with the lingering effects of inflation, the highest seen in four decades, particularly evident in grocery store prices, which are a staggering 26% higher than before the pandemic struck. In light of this issue, President-elect Donald Trump’s proposed tariffs raise concerns about exacerbating financial hardships for families, as new projections suggest these tariffs could lead to further price increases in essential grocery items, according to a recent study conducted by Third Way, a center-left think tank.
As the nation approaches the Nov. 5 election, Trump has put forth a bold economic strategy that includes a sweeping 10% tariff on all U.S. imports and a hefty 60% tariff specifically on products originating from China. This approach, if implemented, would likely lead manufacturers and retailers to pass at least some of these increased costs down to consumers, resulting in a rise in expenses.
According to Third Way’s analysis, the imposition of these tariffs could inflate the average family’s yearly grocery budget by nearly $200 in 2025, representing an increase of over 3%. This raises serious concerns about the accessibility of essential goods for many households.
“Prices are absolutely going to rise, because the added costs from increased tariffs will be paid by the consumer,” warned Gabe Horwitz, the senior vice president for the economic program at Third Way, speaking to CBS MoneyWatch. “And those price increases are going to be a lot harder for folks lower down on the income scale.”
Tariffs are considered a regressive form of taxation, meaning they disproportionately affect low-income consumers. These families spend a larger share of their overall budget on necessities like groceries than higher-income individuals, making the blow of rising prices more severe.
Horwitz and his team of economists conducted an extensive analysis to estimate the impact of new tariffs on grocery shopping habits for an average family of four. They compared current average prices with the potential increased costs that could arise if Trump follows through with his aggressive tariff proposals.
How much more could groceries cost?
In their assessment, researchers estimated that a weekly grocery trip—including staples such as coffee, shrimp, beef, and bananas—could see prices rise significantly. Assuming a typical shopping list, the potential new tariffs would lead to an increase of at least $3.57 per week, translating to an additional annual cost of approximately $185, or a 3.3% rise, according to their findings.
Big-box store prices
Additionally, consumers may also encounter higher prices at big-box retail stores like Walmart and Target, as the Third Way study indicates. One company, Steve Madden, has already initiated changes in response to the proposed tariffs, planning to shift its import strategy away from Chinese goods towards sourcing from countries like Cambodia and Vietnam to mitigate costs.
Families could end up facing a surge in annual spending at big-box stores, projected to rise by about $551, elevating their total outlay from $3,754 to $4,305, according to the findings of the Third Way analysis.
Furthermore, imposing stringent new tariffs risks instigating retaliatory measures from other countries, particularly China, leading to a cyclical escalation of trade tensions. Oxford Economics forecasts a potential scenario where the Trump administration enacts blanket tariffs of 30% on all Chinese imports, to which China may respond with 25% tariffs on U.S. exports, an action that could adversely impact American businesses and consumers alike.
Ryan Sweet, chief U.S. economist at Oxford Economics, aptly remarked, “Tariffs are a two-way street, and the more aggressive tariffs on China will lead to a larger retaliation,” underscoring the broader economic risks associated with such tariff policies.
Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.
What are the potential impacts of proposed tariffs on grocery prices for American families?
**Interview with Gabe Horwitz: Impacts of Proposed Tariffs on Grocery Prices**
**Host:** Thank you for joining us today, Gabe Horwitz, senior vice president for the economic program at Third Way. We appreciate your insights on a pressing issue affecting American families.
**Gabe Horwitz:** Thank you for having me. The financial implications of these proposed tariffs are significant and deserve careful attention.
**Host:** As we approach the November election, President-elect Trump has proposed sweeping tariffs—10% on all U.S. imports and 60% specifically on Chinese products. What does your analysis indicate about how these tariffs could impact grocery prices?
**Gabe Horwitz:** Our analysis shows that these tariffs could inflate the average family’s grocery budget by nearly $200 in 2025, which translates to an approximate increase of over 3% in their yearly food spending. Given that grocery prices have already risen by 26% since the pandemic, this further escalation could pose serious challenges for many households, especially those who are already struggling.
**Host:** That’s a considerable increase. Why are low-income families particularly vulnerable to these price hikes due to tariffs?
**Gabe Horwitz:** Tariffs are inherently regressive—they disproportionately affect low-income consumers who allocate a larger share of their income to necessities like groceries. When essential items become more expensive, these families feel the pinch more acutely than higher-income households, who may have more flexibility in their budgets.
**Host:** Your team conducted an analysis comparing current grocery prices to potential increases. Can you give us an example of how specific items might be affected?
**Gabe Horwitz:** Certainly. For staple items that families rely on, such as coffee, shrimp, beef, and bananas, we are likely to see substantial price increases. A typical weekly grocery trip could see prices surging, impacting everything from dietary choices to overall budgets for families of four.
**Host:** With inflation already impacting American households, could these tariffs exacerbate the current inflationary environment?
**Gabe Horwitz:** Yes, indeed. A broad implementation of tariffs could raise the overall inflation rate by approximately ¾ percentage point. This added pressure on prices could make an already challenging economic situation even worse for many Americans who are just trying to make ends meet.
**Host:** As an economist, what would you advise policymakers as they consider these tariff proposals?
**Gabe Horwitz:** I would urge them to weigh the potential economic fallout on consumers, especially low-income households, against the intended benefits of these tariffs. Programs that support families through this transition, alongside careful consideration of trade policies, will be crucial to mitigate any negative impacts.
**Host:** Thank you, Gabe, for shedding light on these important issues related to tariffs and their impact on grocery prices. It’s clear that these proposals require thoughtful consideration and discussion as we move forward.
**Gabe Horwitz:** Thank you for bringing attention to this vital issue. It’s essential that we understand the full implications of these economic policies on American families.
**Host:** This has been a critical conversation about the future of food prices in our nation. Thank you for tuning in.