Impact of U.S. Tariffs on Groceries & Restaurants and How to Mitigate Them

The uncertainty surrounding impending tariffs between the U.S., Canada, and Mexico raises important questions about how food supply chains will shift. The disruptions seen during the COVID-19 pandemic—empty shelves, wasted food—highlight the potential consequences of a trade war.

Currently, the U.S. and Canada engage in US$70 billion in annual agricultural trade. Much of this supply is stocked in grocery stores, transported by distributors, and served in restaurants. The impact on food buyers at every level will be significant.

Now, more than ever, the urgency for domestic and local sourcing is clear. Supply chain disruptions, rising tariffs, and global uncertainty mean food buyers must act now to safeguard operations. The key to minimizing disruptions, protecting margins, and keeping shelves stocked? A strong local procurement strategy.

Here’s how to build resilience, control costs, and secure a reliable supply chain before challenges escalate.

What are tariffs?

A tariff is a tax imposed by a government on foreign goods entering a country. The U.S. has proposed a 25% tariff on all imported Canadian products (except for oil, which will have a 10% tariff). In response, Canada has announced 25% tariffs on US$30 billion worth of U.S. imports, including meat, dairy, and produce.

How are tariffs paid?

Tariffs are collected at the border. When goods enter a country, the importing country applies the tariff and requires payment from the importer before delivery. For example, if a U.S. grocery store imports meat from Canada, they pay the supplier’s invoice as usual but must also pay the 25% tariff directly to the U.S. government.

Will tariffs affect grocery and restaurant prices?

The exact impact of these tariffs is still uncertain, but they will discourage international food procurement in both countries. If your business primarily sources internationally, expect increased prices and potential stock shortages. At the same time, domestic producers shifting from international sales will increase local supply, offering new sourcing opportunities.

For buyers, this means one thing: if there was ever a time to start or scale a robust local sourcing program, that time is now.

How to mitigate the impact: Source locally

Now, more than ever, a strong local sourcing program is critical. The best way to protect your supply chain and bottom line from tariffs is to develop a domestic procurement strategy. Buying locally helps control costs, ensure product availability, and build resilient supplier relationships.

How to Develop a Local Procurement Program

1. Assess your current supply chain

• Identify which products will be most affected by tariffs.
• Determine where local alternatives are available.
• Map out existing local sourcing categories and assess if they can scale.
• Compare pricing, availability, and quality between your current suppliers and local alternatives.

2. Find new local suppliers

• Build a database of regional farms, producers, and co-ops.
• Use Local Line for supplier discovery and verification.
• Ensure suppliers meet your food safety standards, volume needs, and delivery requirements.

3. Strengthen supplier relationships

• Establish direct contracts to ensure pricing stability.
• Offer loyalty or volume incentives to secure supply consistency.
• Consider a Cooperative Purchasing Agreement (CPA) to bulk-purchase goods alongside other buyers for better pricing and shared logistics.
• Maintain transparent communication to ensure reliability.

4. Lock down logistics

• Optimize delivery schedules, storage, and infrastructure for local supply.
• Work with your team or a third party to streamline transportation and warehousing.
• Adapt to more frequent deliveries and different storage methods required for local sourcing.

5. Leverage consumer demand

• Consumer preference for local products is rising—50% of shoppers reported willingness to pay more for local food in a 2023 study.
• Use this as a marketing opportunity to promote local products in-store or on your menu.

6. Stay agile

• Monitor policy changes, market trends, and supplier capabilities.
• Use data analytics to track pricing, demand, and customer behavior.
• Regularly review and adjust procurement strategies as needed.

Local Food Sourcing with Local Line: How it works

Local Line is the trusted local food sourcing platform for restaurants, grocers, and distributors. We help businesses:

1. Discover new local producers.
2. Digitize and streamline ordering and receiving.
3. Organize all procurement data, from supplier payments to key metrics.

In short, Local Line helps buyers organize and streamline their existing supply chain; as well as expand into new categories.

Find local farms near you

• Discover new domestic suppliers with Local Line’s database of 300,000+ local products.
• Filter searches by location, availability, food safety standards, and more.
• Get notified when new suppliers become available.
• Verify documents, confirm pricing, and request sample deliveries—all from your Local Line dashboard.

Streamlined order management

• Place digital orders to multiple suppliers in one streamlined process.
• View all products, pricing, and delivery details in one place.
• Reduce manual labor and save hours weekly.

Reliable, automated reporting

• Track availability, costs, and order volume in real time.
• Monitor food mile savings, CO2 reductions, and farmer margins.
• Share up-to-the-minute details with your team to make informed sourcing decisions.

At Local Line, we want to help you mitigate the impacts of these changing times. Our Tariff Stability Program (TSP) accelerates relationships for buyers and suppliers to connect and buy/sell local food. Learn more about the program here or chat with our team to learn more about how we can help you.