How Grocery Retailers Can Survive the Impact of Tariffs

From produce displays to merchandising equipment to refrigerated cases, the ripple effects of new tariffs are being felt across the entire grocery supply chain. We decided to take a moment to break down what’s happening, why it matters, and what you can do about it.

Why Do These Tariffs Matter?

The grocery industry depends heavily on global trade for everything from fresh produce to equipment components, so tariffs can have significant consequences.  According to the US International Trade Commission, tariffs on goods like farm products, steel, aluminum, and Chinese imports have already led to rising costs. With the latest round of tariffs—plus the threat of additional ones—many retailers, manufacturers, and consumers are feeling the pinch.

How Will Tariffs Affect the Grocery Industry?

The grocery industry relies on imports for a significant portion of its fresh produce, especially during off-seasons. Tariffs on items like berries, nuts, and citrus fruits from countries have led to higher prices for retailers and, ultimately, consumers. In addition, with the US imposing 25% tariffs on all steel and aluminum imports from all trading partners, many are concerned about the significant impact this will have on the materials used to manufacture produce displays, refrigeration units, and other grocery equipment.

There are several significant ripple effects this could have on the grocery industry:

• Manufacturers may need to find alternative suppliers or absorb higher costs. This can lead to longer lead times and reduced availability of essential equipment.
• US farmers and producers of targeted goods like soybeans, pork, beef, and fruits will face higher costs when exporting to China, one of their largest markets. This could lead to reduced export volumes and lower revenues for US agricultural businesses.
• Producers in other countries, such as Brazil, Argentina, and the European Union, may benefit from increased demand from China, as they become more competitive relative to tariff-affected US goods.
• The tariffs could disrupt global supply chains, as China is a major importer. This could lead to increased volatility in global commodity prices.
• US producers and exporters may struggle with reduced access to international markets; however, domestic retailers and consumers could benefit in the short term.

Overall, the current tariffs and threat of additional tariffs are creating uncertainty for grocery retailers, making it difficult to plan and budget effectively.

What Can Grocery Retailers Do?

While tariffs are largely beyond the control of individual businesses, there are steps you can take to mitigate their impact:

1. Diversify Your Supply Chain

Work with suppliers who source materials and products from a variety of regions to reduce reliance on any single country.  Retailers and manufacturers will need to stay agile and explore alternative sourcing and marketing strategies to navigate these changes effectively.

2. Invest in Durable, High-Quality Equipment

While upfront costs may be higher, durable displays and refrigeration units can save money in the long run by reducing the need for frequent replacements.

3. Prioritize At-Risk Products

Tariffs will only apply to certain products/materials originating in certain countries. Figuring which products (both equipment and supplies) are most at risk for price increases can help you prioritize purchases to lock in current pricing.

4. Buy Local

Tariffs are intended to equalize trade between the US and other countries, so the easiest way to avoid them is by purchasing domestic products. Granted, many products may not have domestic equivalents available (or at a similar costs), but there is a growing volume of solid American products that won’t be subjected to the same price risks as their foreign counterparts.

5. Stay Informed

Keep an eye on trade policy developments and work with industry associations like the Food Industry Association (FMI) to stay updated on how tariffs may affect your business.

Looking Ahead

The ongoing trade tensions and tariff discussions are a reminder of how interconnected the global economy is. For the grocery industry, this means adapting to higher costs, supply chain challenges, and shifting consumer expectations.

At Carlson AirFlo, we’re here to help you navigate these changes and support you with durable, high quality, long-lasting merchandising solutions designed to help your business survive and thrive. If you have questions about how to optimize your retail displays in light of these changes, reach out to us!