5 ways Trump’s economic policies could affect your grocery bill if he wins

Although inflation has fallen below three percent, food prices remain stubbornly high. Donald Trump has vowed that if elected he will bring prices down “very quickly.” But CBS News reports that many Wall Street economists fear his key policies – tariffs, tax cuts and a crackdown on immigration – could have the opposite effect.

And they are hardly alone.

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“Donald Trump’s economic proposals for a potential second term could have a significant impact on both food prices and general inflation,” said Kris Mullins, strategic advisor, investor and entrepreneur. As CMO of Capital Max, his consulting work includes analyzing macroeconomic policies and their impact on everyday financial issues such as inflation.

To predict Trump’s future actions, Mullins must analyze what he’s already done. “Examining his first term provides clues about potential impacts on future economic indicators,” he says. With that in mind, here are some ways Trump’s policies could affect your grocery bill.

A new trade war could make imports more expensive

Protectionist tariffs that drove up the cost of imports were a hallmark of Trump’s first term. He has promised to impose even more of them if re-elected – and the result could increase your supermarket bill.

“The trade policies implemented by Trump, particularly the tariffs imposed on imported goods, could still have an impact on food prices,” Mullins said. “If these policies continue or are intensified, they could lead to higher costs for imported food and potentially an increase in the overall cost of food. This effect could be most noticeable on foods that are heavily dependent on global supply chains, such as fruits, vegetables and seafood.”

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Your grocery bill could increase by nearly $100

The Center for American Progress agrees with Mullins’ assessment. Its own analysis found that a second trade war with Trump would be equivalent to a $90 tax at the grocery store, with the following items seeing the biggest price increases.

• Fresh fruit: 60% are imported, with grapes, bananas, avocados and berries among the top four.

• Fresh vegetables: 38% of the vegetables you find in the produce section are imported into America.

• Coffee: Kona coffee from Hawaii is the only domestically produced variety and accounts for less than 1% of U.S. consumption.

• Seafood: America imports 70 to 85 percent of its seafood and ranks only 18th among global seafood producers.

Retaliatory tariffs could force domestic producers to raise prices

A side effect of Trump’s protectionist trade policy is that the target countries – especially China – usually respond by imposing their own tariffs on the US products they import.

According to the Tax Foundation, American agriculture was particularly affected. In retaliation, China imposed tariffs of up to 25 percent on products grown in the United States, such as soybeans and pork. Because the tariffs made American food more expensive for foreign consumers, they stopped buying it. Some domestic producers saw exports fall by more than 70 percent.

If a similar dynamic were to occur in a second Trump term, producers in hard-hit states such as Kansas, Illinois and Iowa could offset their losses by raising the prices of the products they sell domestically to U.S. grocery stores.

A crackdown on immigration could deprive producers of their primary labor pool

In 2016, on the eve of Trump’s first election, the Iowa Agribusiness Radio Network predicted that Trump’s promise to crack down on illegal immigrants would lead to higher prices at the grocery store.

It states: “A deportation measure would deprive agriculture of workers. 67% of fruit harvesters, 61% of all vegetable farm workers and up to half of all harvest workers are illegal workers. Agricultural economists say any disruption to the workforce would impact the entire food system. Feared consequences include farm bankruptcies, labor shortages and high food prices.”

Almost a decade later, little has changed. The mass deportation of illegal immigrants remains a central plank in Trump’s agenda – and this target group remains at the heart of growing American activity.

According to the Baker Institute, undocumented workers have made up 40 percent of the country’s agricultural workforce for three decades.

The possible impact on the overall inflation rate

Mullins fears that some of Trump’s proposed measures could lead to price increases not only in the grocery store but throughout the economy.

“Trump’s support for reducing regulations and implementing fiscal stimulus through measures such as tax cuts and increased government spending could lead to an increase in general inflation rates,” he said. “Although these measures are intended to stimulate economic growth, they could also lead to an increase in consumer prices. A continuation of expansionary fiscal policies without appropriate countermeasures could lead to increased inflationary pressures that could affect all sectors of the economy. If Donald Trump is re-elected, we could see a continuation of policies that rely on aggressive fiscal stimulus and trade protectionism. While they can boost economic activity in the short term, they also tend to increase import costs, which impacts food prices and fuels general inflationary trends.”

Editor’s Note on Election Coverage: GOBankingRates is nonpartisan and strives to objectively cover all aspects of the economy and present balanced reporting on politically focused financial topics. For more coverage on this topic, visit GOBankingRates.com..

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