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- President Donald Trump’s trade war is causing pain for many US industries, but the tariffs could actually help US restaurants.
- The retaliatory tariffs on US agricultural goods are expected to cause a supply glut, which is already leading to price cuts for major agricultural goods.
- This means restaurants will pay less for ingredients like pork, cheese, and corn.
- According to restaurant invoice management company Plate IQ, the US restaurant industry should save just over $7.5 million due to Trump’s trade war this year.
President Donald Trump’s trade war is taking its toll on a slew of US industries, but there could be one that comes out on top: restaurants.
While the president’s various tariffs are driving up costs for industries ranging from boat manufacturing to TVs, data provided to Business Insider by restaurant invoice management company Plate IQ showed that restaurants are actually seeing prices for ingredients fall due to the tariffs.
For most of the goods, Plate IQ’s explanation for the drop is simple: the US exports a lot of goods, so as farmers are hit with an oversupply, the price of the items will drop and make it cheaper for the restaurants.
While not on the Plate IQ list, one of the most prominent of these price changes for US farmers is soybeans. The crop is a key export, particularly to China, and the recent tariffs on US soybeans by foreign countries is causing a supply increase and a dramatic price drop.
As these commodity prices drop, so too are costs for restaurants that buy these ingredients. Plate IQ used price trend data from its restaurants to determine the savings for the US restaurant industry between March 2018 and December 2018 across six major ingredients: pork, corn, apples, cheese, potatoes, and seafood.
In order to determine the expected future price change, Plate IQ looked at 500,000 restaurant invoices from July 2017 to July 2018. According to the data, seafood is the only one of those major ingredient groups that is expected to increase in price over the course of the year.
Obviously restaurants that are heavily weighted toward certain ingredients (such as pork) will see greater cost decreases than those that lean more toward seafood. But all told, Plate IQ’s data shows that the restaurant industry will save roughly $8 million due to the tariffs.
Here’s a breakdown of how much the restaurant industry could save on each ingredient because of Trump’s trade war.
Corn: $3,068,633 in savings
- China Daily/Reuters
Both China and the EU imposed tariffs on US corn in response to Trump’s tariffs. In response, corn futures have fallen roughly 12% since the start of June as supply continues to grow.
Pork: $14,876,829 in savings
- Melia Robinson/Business Insider
China and Mexico, two of the three largest markets for US pork exports in 2017 according to the US Meat Export Federation, hit the US with tariffs in response to Trump’s trade fights. According to Plate IQ, the backlog of US pork will result in a 2-3% price decrease for all pork products. As part of the decline, the price of bacon is expected to drop by 7.7% for the year.
Apples: $991,570 – $1,442,283 in savings
“Mexico being the biggest customer for apple exports from the US has hit the US hard by imposing tariffs on apples,” Plate IQ said. “China and India have also imposed tariffs on apples thus threatening the market.”
Cheese: $1,480,445 – $1,825,882
The US stockpile of cheese has drawn a significant amount of attention over the past few months, as the backlog of cheese reached historic levels in June. This problem will be compounded by Mexico’s tariffs on cheese since the country is the largest export market for US cheese per Plate IQ.
Potatoes: $6,908,744 in savings
- Marian Weyo / Shutterstock
According to Plate IQ, Mexico’s tariff on frozen french fries and other potato products from the US could cause a problem.
“With large stakes in the Mexican trade this commodity will be seeing a drop in prices – though the government has adopted relief measures to help farmers, a long term tension of this sort could permanently damage the potato industry,” Plate IQ said.
Seafood: an additional cost of $20,476,201 – $20,574,897
Seafood is the only major category that Plate IQ tracked that would actually increase in price due to the tariffs. The reason, according to Plate IQ, is that a lot of American seafood is sent to China where it is processed and then sent back to the US.
So the tariffs are going to add an additional surcharge to the back-and-forth and increase prices.
Here’s the breakdown for various popular types of seafood:
- Crabmeat: additional $1,019,862 cost
- Tuna: additional $18,505,565 cost
- Pollock: additional $144,754 cost
- Haddock: additional $806,020 – $904,716 cost
Total savings: $6,751,324 – $7,646,170
- Jasper Juinen/Getty Images
While the decline in agricultural prices is bad news for US farmers, the restaurants that buy those goods will get a big win from the drop off.