When President Donald Trump announced a 90-day pause on most tariff spikes on April 9, consumers breathed a sigh of relief. The hikes were expected to send prices of imported goods soaring, but the stay offered a moment of quiet for Texans bracing for impact at the grocery store and in restaurants.
Nevertheless, some food businesses, both large and small, have been forced to deal with massive swings in the cost of Chinese imports. Tariffs on China have see-sawed from 145% to 30%.
The 10% tariff on items from the European Union has already caused further stress and uncertainty for others.
That uncertainty has sent Texas restaurants and other food businesses into overdrive, calculating and strategizing solutions on what-if scenarios.
“In a business where every penny counts, this kind of volatility is tough,” said Emily Williams Knight, president and CEO of the Texas Restaurant Association.
Knight made the comment even before the latest jolt of uncertainty.
On Friday, Trump posted on social media he is recommending a 50% tariff on the E.U. as soon as June 1. The 117-word post injected a new bout of volatility into the fast-changing landscape.
Such an increase would most notably be seen in the prices of wine and spirits imported to Texas.
The constant back-and-forth on tariffs — are they real? are they just a negotiating tool? — has created a sense of anxiety and concern in the industry not felt since the pandemic.
Simply put, tariffs are a tax levied on products the United States buys from other countries. These taxes are collected at the border. Most of the time, the importer es the additional cost on to the distributor, who es it on to the store owner or restaurateur, who es some of all of it to the consumer.
Now, the question facing the food industry is when and how to respond.
“They must either absorb these higher costs by reducing their profits — or them along to customers.” said Umit Gurun, professor of finance and ing at the University of Texas at Dallas.
Restaurants, for instance, typically operate on thin profit margins between 3% and 5%, according to Gurun.
Currently, many businesses are responding by deferring investment decisions and long-term contracts.
Some businesses are attempting to stockpile products. That is, if shelf life isn’t a concern and a business can assume the financial risk.
“This defensive inventory building,” Gurun said, “strains both warehouse capacity and cash reserves.”
It’s unknown whether tariffs will increase in June or July, if not sooner, for dozens of countries.
If they do, Knight warned “consumers will see it on the menu — whether through higher prices or fewer options.”
Hidden costs
Consumers might not be thinking about additional, sometimes invisible costs in the food industry. To-go containers, thermal and insulated packaging, and cooking equipment are brought in from outside the United States.
That’s reality for Adán Ventura, a caterer who sells ready-to-eat paella at Central Market in North Texas and at La Tienda locations nationwide.
Ventura’s cellphone is filled with messages he’s exchanged with suppliers about pricing, which has increased as much as three times compared to earlier in the year because of the tariffs.
Ventura owns two catering companies, Tasty Paella and ACD Kitchen as well as Easy Paella, a brand of ready-to-eat paella.
One of the first aftershocks Ventura felt were for thermal bags, which the chef orders from China for to-go orders of paella.
He picked up 4,000 bags for 89 cents each in February. With shipping, the product was expected to cost Ventura $1.60 per bag.
But the order was put on hold amid the roller coaster of tariff changes. Ventura watched as the shipping costs, the place where tariffs are typically tucked in, roiled.
The cost swelled to $3.60 per bag over the course of three weeks in March and April.
Sure, Ventura could buy bags in the U.S., but they would set him back $4.50 apiece.
“They ask for a $10,000 deposit to start working with me,” Ventura said, “and I don’t have that kind of money.”
Plus, he added, the quality is inferior.
Ventura’s order was finally shipped from China on May 12. He expects to receive the bags later this month.
It’s just one example of many in Ventura’s world.
A stainless steel cart he was eyeing for his catering events jumped from $120 to $350, before falling back to $250 with the Chinese tariff reprieve.
Squid he brings in from China hopped from $4 per pound before the tariffs to $6.25 — and then skyrocketed to $18.
“I had to buy it at that price because we already had a Mother’s Day commitment,” Ventura said, “but we have to look for more sustainable alternatives.”
So far, Ventura has not increased his prices, opting to absorb the higher costs. He plans to wait a few months before a hike to see whether the tariff situation changes.
At the moment, Ventura is torn on whether or not he agrees with the tariffs.
“I feel half and half,” he said, “half disagreeing and half that it was necessary.”
Ventura compared today’s tariffs to the supply chain difficulties and price surges seen amid the COVID-19 pandemic: Both situations forced businesses to look for alternatives to survive.
Wine woes
Wine buyers in Texas are already feeling the strain of a 10% tariff hike on alcohol imported from countries such as , Italy and Greece. If the tariff goes up to 50% on goods from the E.U., the effects could be colossal for the wine industry.
Uncertainty and frustration are two feelings that describe this roller coaster of a season for Grant Richardson, founder of wine importer Pangea Selections, based in Austin.
“Irate, incredulous and exhausted fit the bill too,” he said in a text message on the morning of May 23.
Pangea buys 70% of its wines from outside the United States and distributes them to Texas grocery stores such as Central Market and Dallas restaurants such as Fond and Written by the Seasons. He sells mostly organic, biodynamic and natural wine.
The threatened 50% tariff on goods from the countries Richardson relies on most would make importing wine unprofitable for his small business.
The casual wine drinker is most vulnerable, said Barbara Werley, a master sommelier who buys wine for Nuri Steakhouse in Dallas.
Worse, said Werley, the casual consumer might decide not to buy wine at all. She created the wine list at Nuri, a Dallas restaurant with an 8,000-bottle cellar, many of them priced at hundreds of dollars each, or more. Despite the restaurant’s reputation as one of the most expensive buildouts in Dallas history, Werley wants customers to believe they’re receiving value.
Nuri’s by-the-glass list includes a few as low as $12 — an impressive price, given that Nuri also sells a bottle of grand cru from for $11,500.
Family-owned restaurants could be in trouble, too.
“If you’re a small Italian restaurant, you may not be able to sell Italian wine,” Werley said.
With a potential 50% tariff to EU imports, Werley isn’t making any sudden moves.
“Everybody is in the same boat, saying: Now what?” she said.
