The U.S. trade group representing restaurants urged President Donald Trump to spare food and drinks from tariffs, estimating the levies could cost the industry more than $12 billion and lead to higher prices for consumers.
In a letter to the president, the National Restaurant Association said companies would have no choice but to raise prices if tariffs came into effect, citing the industry's already-tight profit margins of 3% to 5% on average. Trump pledged during his campaign to
"We urge you to exempt food and beverage products to minimize the impact on restaurant owners and consumers," the association said in the letter viewed by Bloomberg News. "This will help keep menu prices stable."
The group estimated the potential impact assuming 25% tariffs on food and beverage products from Mexico and Canada.
In its letter, which was sent earlier this month, the association praised some of Trump's plans, including a proposal to
"For many food products, the appropriate climate and growing conditions do not exist in the US year-round to produce the quantities needed for our businesses," the group said in the letter, signed by Chief Executive Officer Michelle Korsmo.
Food costs account for about 33 cents of every dollar of sales, so tariffs could result in a profit decline of about 30% for the average small restaurant operator, the association said. The group's members say that rising food costs are among the main challenges to growth.
Restaurants are battling to attract diners following years of price increases across the economy that have caused many consumers to retrench and prioritize spending on other areas. Large chains have rolled out value menus with varying degrees of success. Some, including McDonald's Corp., have
"Right now, restaurants really do not have much wiggle room," said Joe Pawlak from food service consulting firm Technomic.
