The Double Whammy: How Trade Wars and Climate Change Are Inflating Your Grocery Bill
Life in America is becoming increasingly expensive, and a significant driver of this financial strain is the rising cost of food. While overall inflation has cooled somewhat since its peak in 2022, food prices have surged nearly 25% over the past four years, and experts predict this upward trend will continue. Several factors are contributing to this concerning situation, including the lingering effects of the pandemic, Russia’s war in Ukraine, elevated fuel and energy prices, and extreme weather events that are disrupting supply chains.
Recent events have further exacerbated the problem. A nationwide bird flu outbreak has sent egg prices soaring to unprecedented levels. Rising temperatures and erratic rainfall in Western Africa are pushing chocolate prices to new heights. Years of drought in the U.S. have led to historically low cattle inventories, causing beef prices to climb. These factors combine to create a perfect storm, resulting in skyrocketing supermarket bills, tighter household budgets, and reduced access to nutritious food for many Americans.
Adding fuel to the fire is President Donald Trump’s latest series of trade decisions. Amid a flurry of announcements regarding federal funding freezes, food program terminations, and potential government layoffs, the president has been implementing unpredictable and often contradictory trade policies that threaten to disrupt established supply chains and drive up prices for consumers.
In a single week, Trump enacted blanket tariffs against goods from Mexico, Canada, and China, only to then exempt some products under the United States-Mexico-Canada trade agreement. He then doubled tariffs on Chinese goods before threatening to impose new taxes on Canadian products. He even ordered his administration to double duties on Canadian steel and aluminum imports, a decision he later scaled back to 25% before those duties went into effect. These erratic policy shifts prompted immediate retaliatory measures from Canada and the European Union.
Economists warn that the pendulum-like nature of Trump’s trade policies will almost certainly lead to higher grocery store prices. The uncertainty has already spooked financial markets, and major retailers like Target’s CEO Brian Cornell have warned that customers could see "sticker shock" on fresh produce "within days" if some of the promised tariffs are implemented.
"When it comes to extreme weather shocks, which are destroying our supply chains, climate change is increasing prices and creating food inflation," said Seungki Lee, an agricultural economist at Ohio State University. He argues that policymakers must fully account for the impact of climate change when formulating trade policies, otherwise, "we will see the compounding impacts of tariffs and climate change-related shocks on the supply chain."
Tariffs, which are essentially taxes on goods imported from other countries, are often used as a negotiation tactic in international trade. However, consumers and producers are often caught in the crosshairs. When goods enter a country, tariffs are calculated as a percentage of their value and paid by the importer, who may then pass on the cost to consumers. This means that everyday people could end up paying more for imported goods like fresh fruit grown in Mexico.
Given the United States’ significant reliance on Canada, Mexico, and China for agricultural trade, farmers, analysts, business leaders, policymakers, and the general public have all expressed concerns about the potential impact of tariffs on grocery store prices and the possibility of trade wars slowing down economic growth.
The previous round of tariffs imposed on China during Trump’s first term triggered retaliatory tariffs that devastated agricultural exports and commodity prices. This cost the U.S. agricultural industry more than $27 billion, which the government then had to offset with subsidy payouts. To this day, the U.S. has not fully recovered its market share of soybean exports to China, its largest agricultural export market. An analysis by the National Bureau of Economic Research found that the 2018 trade war with China was largely passed on to consumers in the form of higher prices, reducing their income by about $1.4 billion per month. Rural agricultural sectors in the Midwest and the mountain west were particularly hard hit by China’s retaliatory tariffs.
This time around, Trump appears to be doubling down on the tactic, despite the unpredictable nature of his demands and messaging. Economists have even dubbed the president an "agent of chaos and confusion" due to the volatility of his trade policies. Together, China, Canada, and Mexico supplied roughly 40% of the goods the U.S. imported last year. In 2023, Mexico alone was the source of about two-thirds of vegetables imported to the U.S., nearly half of fruit and nut imports, and approximately 90% of avocados consumed nationwide.
Even without factoring in retaliatory tariffs, estimates suggest that the levies imposed by Trump could amount to an average tax increase of anywhere between $830 and $1,072 per U.S. household per year. "I’m a little nervous about the increase in tension," said Lee. "It could lead to an immediate shock in supermarket prices."
Canada and China have already responded with tariffs of their own. Canada imposed tariffs on nearly $21 billion worth of U.S. goods, including orange juice, peanut butter, and coffee. China imposed 15% levies on wheat, corn, and chicken produced by U.S. farmers, as well as 10% tariffs on products including soybeans, pork, beef, and fruit. Mexico, meanwhile, initially planned to announce retaliatory tariffs but ultimately celebrated Trump’s decision to postpone.
In response to Trump’s steel and aluminum tariff hike, Canadian officials announced a second $20.7 billion wave of duties, and the European Union declared it would begin retaliatory trade action next month on a range of U.S. industrial and farm goods, including sugar, beef, eggs, poultry, peanut butter, and bourbon.
With Trump’s planned tariffs, Americans can expect to see fresh produce shipped from Mexico, such as tomatoes, strawberries, avocados, limes, mangos, and papayas, as well as types of tequila and beer, become more expensive. Other agricultural products sourced from Canada, including fertilizer, chocolate, canola oil, maple syrup, and pork, are also likely to see cost increases. New duties on potash, a key ingredient in fertilizer, and steel used in agricultural machinery coming from Canada could also indirectly elevate food prices. Many of these products, such as avocados, vegetable oils, cocoa, and mangoes, are already experiencing surging price tags due in part to rising temperatures.
Even the uncertainty surrounding Trump’s tariff policy is enough to drive up grocery costs for consumers, according to James Sayre, an agricultural economist at the University of California, Davis.
"All of this uncertainty is really bad for businesses hoping to import, or establish new supply chains abroad, or for any large-scale investment," said Sayre. "Just this degree of uncertainty will increase prices for consumers and reduce consumer choice at the supermarket … even more than tariffs themselves."
Meanwhile, climate change continues to fuel food inflation, leaving American consumers to bear the brunt of a warming world and the cascading effects of an administration seemingly intent on disrupting global trade relations.
"It is actually a little bit hard to anticipate what we can expect from the current administration when we are seeing the burden of food inflation by tariffs or trade, and also at the same time, we have climate-related shocks on the supply chain," said Lee. "Hopefully we will not see an unexpected compounding effect by these two very different animals."
In conclusion, American consumers are facing a challenging situation with rising food prices driven by a complex interplay of factors. Climate change and its impact on supply chains are being compounded by unpredictable trade policies that threaten to further inflate grocery bills. Addressing this crisis will require a comprehensive approach that includes mitigating climate change, promoting stable and predictable trade relations, and supporting policies that ensure access to affordable and nutritious food for all Americans.
