Tariffs: What Do They Mean for Our Co-op & the Cost of Groceries?

Tony White, General Manager

It’s now July, and for most of the year, the news has been riddled with speculation and concerns about how tariffs will impact the economy and the cost of goods, including food, and for our purposes today, your grocery bill. Here at the Co-op, we have certainly heard many comments from customers and staff alike, curious about the implications—here and now, or maybe, possibly, potentially in the future.

I wish I had a crystal ball to help predict what’s next, and I’m not the only one—even the “experts” are perplexed, and everything is constantly in flux. What was in place two weeks ago is not in place today, but could be again in two weeks, or tomorrow, for that matter. And you are not the only one, if the volatility and uncertainty are causing some level of anxiety. I want to try to summarize some of what is taking place and share insights we’ve been given. Hopefully, this will help ease some anxiety, but please excuse me if the information I share as of this writing is less relevant or totally inaccurate when you read it.

Many industries, including the grocery sector, are grappling with price increases and supply chain disruptions, largely due to impending tariffs on imported goods from China, Mexico, and Canada. These trade negotiations are reshaping the landscape of food prices and consumer sentiment. The actual increases are yet to be seen and could vary depending on geographic location. And now, the courts are involved.

Approximately half of U.S. food imports come from Mexico and Canada, so it’s worth noting that almost all food and agricultural goods from these two countries will remain exempt from tariffs under the US-Mexico-Canada Agreement (USMCA), including fresh produce. That isn’t to say prices won’t increase for other reasons like the strength of the U.S. dollar or the cost of transportation, equipment, and fertilizer, but the tariffs are not as blanketed on all grocery items as the headlines sometimes suggest.

The foods with the highest potential for increased pricing under import tariffs include tropical fruits, coffee, cheese, nuts, olive oil, and your favorite bottle of wine from across the pond. Economists also anticipate broader increases due to single ingredients used in various food products. It’s a solid reminder to opt for local when you are able.

The good news? For over 50 years, your Co-op has established and nurtured regional and local partnerships with hundreds of food suppliers! Sourcing goods close to home has always been a priority, to support our farmers and makers and to bolster our local economy. In 2024, 42% of our sales were from over 540 local producers, including your very own Co-op. Now, we all get to reap the reward of this Co-op commitment. There are no direct tariffs on strawberries from Skagit, bluebs from Bow, or wine from Walla Walla! How fortunate we are to live in a place of bounty—the Pacific Northwest provides. Yet, local producers are not immune to tariffs, so we need to double down on our commitment to them. Why? Our regional growers, producers, and makers also operate using equipment, feed, office supplies, and packaging that will likely be tariffed. We know our good-hearted suppliers want nothing less than to pass costs on, but financial viability requires it. The trickle-down effect may be slow, but it will be felt. Your Co-op also strives to keep prices fair, but we will adjust as needed; triple bottom line economics do not usually result in the cheapest end product, but we are still able to provide value while caring about people, planet, and profitability.

Additionally, when tariffs were first announced, there were exclusions for aluminum and aluminum derivatives such as cans and foil, but these exceptions have since been terminated. Unfortunately, the vast majority of packaging supplies for agriculture and food stores are manufactured in China and other Asian countries. At this time, the original 145% tariff on these Chinese products has been reduced, now subject to a 25% tariff. We plan to constantly evaluate the cost of our packaging supplies and production materials without reacting to short-term increases, but instead, let things shake out before making any significant changes.

Impact on Non-food Small Businesses

Producers of personal care items such as body scrubs, toothbrushes, hairbrushes, and the like, can expect significant cost increases. Many local makers of jewelry, crafts, and other home goods can only source certain supplies from China; beads and wire for jewelry are good examples. Already facing high labor costs, they must now navigate increases in the cost of goods. Unfortunately, we have already seen the closure of some local businesses and anticipate there will be more.

Overall, the tariff situation is too volatile to make long-term predictions, and some level of impact is inevitable. Regardless, I take comfort in the Co-op’s solid foundation and you all—the Co-op’s avid supporters—knowing we recently weathered the pandemic and all of its curveballs. The Co-op has been here since 1973. We remain resilient and will work hard to serve our community as we always have.

Thank you for standing by and supporting your Co-op and our vibrant local community.