U.S. retail and restaurant operators said they are concerned about the impact U.S. President Donald Trump’s tariffs on imports from several countries will have on food prices, consumers, and businesses.
The U.S restaurant industry, which is already struggling financially with multiple bankruptcies, restaurant closures, and higher food prices, will now have to navigate the fallout of tariffs in order to keep their doors open, National Restaurant Association (NRA) President and CEO Michelle Korsmo said.
“The biggest concerns for restaurant operators – from community restaurants to national brands – are that tariffs will hike food and packaging costs and add uncertainty to managing availability while pushing prices up for consumers,” Korsmo said. "Restaurant operators know consumers are very sensitive to costs and have kept menu price increases to 30 percent, while their food costs have gone up 40 percent in the last five years.”
The NRA asked the Trump administration to have food and beverages removed from the tariffs.
The uncertainty and inflationary pressures created by reciprocal tariffs are a major worry for American consumers and food industry member companies that operate on slim 1.6 percent retail and 7.5 percent food manufacturing net margins, FMI - The Food Institute President and CEO Leslie G. Sarasin said on 2 April.
Customers are “apprehensive,” Sarasin said, noting that 54 percent of shoppers in FMI’s March Grocery Shopper Snapshot cited increased tariffs on imported food as their biggest concern related to the price of groceries, a 5 percentage point increase from January.
“Our food system is intricately linked with global markets − including products not grown in the U.S. like bananas or seasonal items − which helps keep prices down while providing American shoppers year-round access to safe, nutritious food,” Sarasin said.
Sarasin added that the tariffs could cancel out positive steps that reduce the regulatory burden on the industry.
“We are concerned that today’s tariff announcement could bring rising prices, a squeeze on household budgets, and reduced competitiveness for American companies relative to international competitors,” Sarasin said.
The overall consumer sentiment is “nervous,” PwC Partner and Global Retail Leader Kelly Pedersen said during the National Retail Federation’s (NRF) State of the Retail and The Consumer virtual event on 2 April. Particularly in the lower-income demographic, which has been hit hardest in the past few years and “can’t really absorb more inflation,” Pedersen said, there is “uneasiness” about the economy.
The University of Michigan’s Index of Consumer Sentiment, which has monitored trends in U.S. consumer perspectives for 75 years, said it found consumers were fearing inflation at slightly higher rates than before. The index attributed this uptick to consumers feeling “substantial uncertainty, particularly in light of policy changes under the new presidential administration.”
Even though consumer confidence is declining due to inflation and tariffs, consumer spending is “not unraveling,” NRF Chief Economist Jack Kleinhenz said during the webinar.
“While we do expect slower growth, consumer fundamentals remain intact, supported by low unemployment, slower but steady income growth, and solid household finances,” Kleinhenz said.
The NRF forecasts that retail sales will grow between 2.7 percent and 3.7 percent in 2025 to between USD 5.4 trillion (EUR 4.9 trillion) and USD 5.5 trillion (EUR 5 trillion). Retail sales grew 3.6 percent in 2024.
“Overall, the economy has shown continued momentum so far in 2025 – bolstered by low unemployment and real wage gains. However, significant policy uncertainty is weighing on consumer and business confidence,” NRF President and CEO Matthew Shay said.
NRF expects GDP growth to decline just below 2 percent in 2025, down from 2.8 percent in 2024 and below the trend of the past few years. And, with the implementation of tariffs, NRF expects PCE inflation to remain at the current level of about 2.5 percent.
Non-store and online sales are expected to grow between 7 percent and 9 percent in 2025 to a total of between USD 1.57 trillion (EUR 1.42 trillion) and USD 1.6 trillion (EUR 1.5 trillion). By comparison, non-store and online sales grew 8.1 percent last year.
