FROM THE CONSULTANTS By Carl Sacks
The Economic Impact of Elections: Tariffs
T he 2024 election some of these modifications seem likely to negatively affect the catering industry. Some of the policy changes expected to have the most significant impact on caterers are the tariffs currently being implemented. As of the time of preparation of this article, it seems likely that tariffs will be imposed on most imported items, even those coming from our closest allies. Note that tariffs are charged on results delivered an apparent mandate for change in many areas. Unfortunately, the wholesale value of products on entry into the U.S. and are paid by the businesses that receive them, not by the growers, manufacturers, or consumers. For the tariff costs to be borne by the end user, prices
would need to rise, reigniting the inflation spiral. Caterers generally do not import products directly but are not end users either. As such, a 25% tariff will typically raise the prices caterers pay for these products, not by the full 25% but by somewhat less. The assumption is that the importers will absorb some of the tariff-based increase. However, since caterers are value-adding intermediate consumers of imports, these tariffs will likely impose substantial cost increases on our industry. Mexico and Canada Virtually all caterers in the U.S. purchase perishable food items from these two countries. While much of the U.S. protein supply is
domestic (poultry, eggs, and beef in particular), a substantial amount of seafood and pork comes from Canada. At the same time, Mexico provides massive amounts of seasonal produce. A 15% increase in prices of these products based on a 25% tariff will make a noticeable difference, possibly as much as 2–3% food cost on food revenue. China As the world’s manufacturing center, China provides many products caterers use. These include electronics, kitchen machinery, linens, and other tabletop items. While the catering industry is not as susceptible to price increases on Chinese products as some other sectors, these cost spikes may shave a small percentage off operating profit.
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SPRING 2025 ■ CATERSOURCE
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