Trump’s tariffs, deportations and climate change are making groceries in the U.S. more expensive

Grocery prices rose last month at their fastest pace in three years. (Joe Raedle/Getty Images via CNN Newsource)

U.S. President Donald Trump pledged to bring down grocery costs. But his administration’s policies are contributing to an acceleration in prices, food economists and companies say.

Grocery prices last month rose at their fastest pace in three years, stoked by Trump’s tariffs, a crackdown on immigration, and extreme weather hurting food production. Prices jumped 0.6 per cent in August from the month prior, according to the latest reading from the Bureau of Labor Statistics, and they are up 2.7 per cent from a year ago.

Food prices are deeply personal to consumers, and weekly grocery bills shape their overall perceptions of the economy. More than half of Americans count grocery costs as a major stress in their lives.

Low-income and middle-income Americans, hit the hardest by rising grocery costs, are changing where they shop and what they buy. Companies are also taking extreme measures to appeal to shoppers strained by higher prices, such as bringing back paper coupons.

“Food prices are top of mind for consumers and people across the country. It’s dominating the conversation across kitchen tables,” said David Ortega, a food economist at Michigan State University. “It’s also a political flash point. People went to the voting booth last campaign voting for their candidate to lower grocery prices.”

Ortega said the greatest price impact is on foods that either rely heavily on immigrant labor to produce in the United States, such as fruit and vegetables, or those grown almost exclusively in other countries and subject to steep tariffs, like coffee and bananas.

“The policy agenda that we’re seeing is more likely to increase the price of food,” he said.

If tariffs remain at current levels, food prices will rise 3.4 per cent in the short-run and stay 2.5 per cent higher in the long-run, Yale University’s Budget Lab estimates. Based on the tariffs imposed by Trump this year, the average effective tariff rate in the United States has spiked to the highest level since 1935, according to The Budget Lab.

But White House spokesperson Kush Desai said that one month of data does not make a trend, and the rate of inflation under Trump has slowed from the final months of the Biden administration.

Trump has struck “unprecedented trade deals and trillions in historic investment commitments” that are “laying the groundwork for the long-term restoration of American Greatness,” Desai said.

Tariff-driven hikes

The Trump administration said that trade deals with other countries would include tariff exceptions on items such as coffee and bananas. But right now, heavily imported foods are seeing some of the sharpest increases.

Coffee prices surged by 3.6 per cent last month, the largest one-month increase since 2011, according to the latest Consumer Price Index. Coffee prices are up 20.9 per cent so far this year, a near-record annual increase. The US gets most of its coffee from Brazil, and Brazilian imports – including coffee – began facing 50 per cent tariffs last month.

It’s not just your cup of joe. America is highly dependent on other countries for most of its fresh fruit and vegetables. Imports make up 60% of fresh fruit and 38% of fresh vegetables in the United States, according to the Agriculture Department.

Prices on these items are rising. Last month, apple prices increased 3.5 per cent, lettuce 3.5 per cent and bananas 2.1 per cent from the month prior, the index showed.

Tomato prices were up 4.5 per cent. The United States depends on Mexico for a variety of fresh tomatoes, most of which began facing 17 per cent tariffs in July after a nearly three-decade-old trade agreement expired.

Immigrant workforces in fear

Agricultural production in the United States relies on undocumented workers. Undocumented immigrant farmworkers who produce fruits and vegetables account for 42 per cent of farmworkers in the United States, according to the Agriculture Department.

That means the administration’s crackdown on immigration, including at job sites, is impacting the food industry. Immigration raids have hurt major growing areas, leaving crops unharvested at California farms and scared off workers at dairy farms in New York and other states.

Since January, 1.2 million foreign-born workers have left the labor force. Agricultural employment dropped 6.5 per cent from March to July, a loss of about 155,000 workers, reversing two years of growth.

A shrinking workforce will also chill investments in the food supply chain, said William Masters, a professor of food and nutrition economics at Tufts University.

Having fewer immigrant workers has pushed labor costs up, fueling higher prices, economists say.

“If you’re thinking of a new orchard, greenhouse, or warehouse, you wouldn’t do that now because you would not get workers,” he said.

Trump’s policies aren’t the only factor contributing to the rise in prices— climate change is also boosting costs.

Supply shortages in top orange-growing areas, worsened by climate change-influenced disasters like more severe hurricanes in Florida and intense droughts in Brazil, have pushed up prices. Prices for oranges jumped 0.9 per cent last month and 5.2 per cent annually.

Beef prices increased 2.7 per cent last month and were up 13.9 per cent annually, driven by smaller cattle herds due to drought and processor closings. Cattle herd sizes are at their lowest levels in 74 years, according to the American Farm Bureau Federation.

Kroger bringing back coupons

Amid the higher costs of getting food on grocery store shelves, companies say a two-tier economy has opened up among shoppers.

Wealthier shoppers are still buying premium foods and ingredients, but lower-income shoppers are stressed. They’re buying smaller sizes and skipping discretionary items, purchasing only the essentials.

Low- and middle-income households are “making smaller but more frequent trips and they’re buying more private label products. They’re also eating out less,” Kroger CEO Ron Sargent said on an earnings call last week. “Higher income households — while they’re also concerned about the economy and food prices — they’re still spending. And they’re splurging on some of the premium products.”

Looming cuts to the Supplemental Nutrition Assistance Program (SNAP), or food stamps, will further strain low-income customers. Republicans’ One Big Beautiful Bill Act makes the largest cuts in the program’s 86-year history and will cause roughly 4 million people a month to lose some or all of their SNAP benefits.

Kroger is bringing back paper coupons, a move that highlights how shoppers are relying on promotions to lower their grocery bills. The company discontinued some paper coupons in 2023, prompting pushback from older and less tech-savvy customers.

But Sargent said Kroger is doing an about-face on coupons to reach customers “who don’t have a $600 iPhone.”

Article written by Nathaniel Meyersohn, CNN