With the administration's stance on tariffs in constant flux, many independent grocers and their shoppers are asking, "How will this impact the cost of groceries?"
IGA CEO John Ross sat down with CNN's Isabel Rosales on Saturday, April 12 to discuss the topic, with Ross calling for food producers, farmers, and retailers to be included in the administration's conversation on how to lower the cost of groceries.
Watch the clip or read the transcript below.
CNN's Isabel Rosales: Food industry experts warn that President Trump's tariffs will soon make your trip to the grocery store even more expensive. That is because supermarkets sell imported items in every section, from fresh and packaged foods to household basics. But just how much more can you expect to pay and which items will be hit the hardest? Joining us to help tackle the real world impacts of the trade war is John Ross, the CEO of Independent Grocers Alliance, a chain of independent grocery stores.
Really appreciate you being here. This is so important. We all have to eat, right? What are you hearing from retailers?
IGA CEO John Ross: Well, the retailers are confused. It's kind of a policy of the moment. And so they're picking up the phone and they're calling their suppliers and their wholesalers and they're saying, 'What's going to happen to my cost of goods? What do I tell my shoppers?'
And of course, this comes on the heels of three to four years of unprecedented food inflation in the United States. If you look at the average basket of groceries that a consumer here would have bought at the Kroger or the IGA or a Walmart back in 2019, it's 36% more expensive today than it was just a few years ago. And so anything that's going to put additional price pressure on that really harms American shoppers and it makes our retailers afraid.
Rosales: Yeah, and there's some data out from Yale University's budget lab that said the food prices will rise 2.8% overall from these tariffs, including 4% on fresh produce. Are there particular items of concern that you're seeing around your grocers?
Ross: Well, it all depends upon which countries are in and which are out. And of course, those rules are changing by the moment.
You've got a selection here. We don't grow bananas in the United States, and it's unlikely we ever would. So obviously, we'd be concerned about import products that can only be grown in other countries.
The other piece of this too, we've got to be worried about coffee, you have to be worried about tea, you have to be worried about shellfish, cocoa. Both coffee and cocoa are at all times highs on the commodity markets, and that's already. And then you come in and you put policy in place which is likely to increase the cost to the consumer, and you start pricing the average grocery basket out of range for the average consumer, that's concerning.
Rosales: Yeah, coffee in particular and cocoa that can only be grown in like the coffee belt around the equator. So this whole argument of, well, just grow it domestically doesn't really work with a commodity like coffee.
I have heard from coffee shop owners. We only import about 1% of that domestically. What do you tell people that are low poverty that are now very concerned about their ability to afford fresh foods?
Ross: Well, so the big question here is, 'How do we think about policies that can lower the cost of groceries versus ones that would likely increase those costs?' And in order to figure out how you lower the cost, actually reduce costs, you have to get inside the supply chain.
And simplistic answers don't often get there, so you've got to look at the cost of transportation, the cost of labor. Truck drivers are in short supply, and every time you touch a piece of food right out of the ground to the supplier, to the developer, to the wholesaler, like that's a truck moving that around, and so you talk about the cost of energy and the cost of the actual trucks themselves. And of course, the demand for drivers is so high because drivers are now delivering products to people's houses with Amazon and all the online shopping. And so that's competition, which causes the cost of driver salaries to go up. It's why UPS drivers are making $150,000 a year.
So there's a lot going on already in terms of driving the cost of food. And then suddenly if you put incremental taxes on both the food themselves, but inside those food products, right? What about the cost of fertilizer? It's more than double what it was just a couple of years ago, up 40% this year alone. The cost of tractors and combines, they're up over 100%.
The poor American farmer, now we're family-owned grocers, we buy from family farms, and I'm as worried about the farmers as I am about the retailers. Because they not only depend upon domestic supply, but they are heavy exporters. Every one of those products, the bananas obviously, we export to foreign countries and our two biggest trading partners, China and Canada, both of which have been hit heavily on this trade war.
Rosales: I think it's lost on people the supply chain of an item. Even if the item is great, grown or made right here in America. I was just speaking to a soybean farmer who talked to me about the price of fertilizer, the steel and aluminum parts that he uses, you know, for his tractor trailer, all of these concerns. And it really seems like there's a one-two punch here for imports and exports. How long can we keep this up?
Ross: Well, so I'm hoping that the pause allows some rational conversation. This isn't really politics. This is mathematics, right? You need to have a conversation about how tariffs actually work.
And we know how they work. We've been using them for decades. And strategically, they can be effective.
But unfettered and kind of spray and pray pattern tariffs, we've never seen anything quite like this before. I would hope that the administration would involve some experts who aren't just attorneys or hedge fund managers, maybe some people who know something about food. So get some food brokers, get some retailers, have a conference of what the drivers that will lower the cost of food to Americans versus the policies we see right now, which are more likely to raise them.
Rosales: Amazing. Thank you so much. Good advice there. So many Americans, you know, watching this quite closely and it's a whiplash day by day. Appreciate your time, John.
Ross: Thank you for having me.