Restaurant Association: Tariffs Could Cost Industry $12 Billion

The restaurant industry has urged the White House to avoid tariffs on food and beverages.

Those tariffs could cost the sector more than $12 billion and bring about higher menu prices, the National Restaurant Association said in a letter to President Donald Trump, per a report Tuesday (Feb. 25) by Bloomberg News.

In the letter, the trade group argued that restaurants would be forced to raise prices if the tariffs went into effect, pointing to the industry’s already lean 3%-5% profit margins. The association is basing its estimates assuming a 25% tariff on food and drink from Mexico and Canada.

“We urge you to exempt food and beverage products to minimize the impact on restaurant owners and consumers,” the association said in the letter seen by Bloomberg News. “This will help keep menu prices stable.”

According to Bloomberg, the restaurant association praised some of Trump’s proposals, like eliminating taxes on tips or a plan to review trade agreements. However, the letter also argues that food and beverages don’t play a meaningful role in the trade deficit issue Trump has pledged to solve.

“For many food products, the appropriate climate and growing conditions do not exist in the U.S. year-round to produce the quantities needed for our businesses,” the group said in the letter, signed by Michelle Korsmo, the association’s CEO.

The restaurant association’s warning follows one last year from the National Retail Federation, which projected that Americans could lose between $46 billion and $78 billion in spending power each year if the tariffs went into effect.

Meanwhile, the February edition of the University of Michigan’s Surveys of Consumers showed consumer sentiment fell about 5%, with Surveys of Consumers Director Joanne Hsu attributing the decline in part to consumers’ worries about the impact of tariffs.

Research by PYMNTS Intelligence shows that 71% of U.S. consumers and small businesses say they are knowledgeable about the tariffs, and of that group 57% think these tariffs will have a major, negative impact on their bank accounts.

“They’re not only worried about the big picture economy (though 40% are concerned about that, too),” PYMNTS CEO Karen Webster wrote in a column earlier this month.

“They’re worried about their own bottom line. That’s because 78% of those consumers anticipate higher prices and 75% expect product shortages. If you’re getting flashbacks to those empty store shelves during COVID, you’re not alone. It’s the same kind of anxiety that consumers now express, just with a different root cause.”