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Tariffs On Imported Food: How It Affects Your Grocery Chain

How do tariffs impact the prices of what we buy?

Import tariffs are taxes imposed by the government on foods that are purchased in other countries. Often it is charged as a percentage of the value of what you are buying.

Unless a grocer grows all its own food, it will likely be impacted in some way by tariffs either directly or indirectly. Your grocer will buy foods from a foreign source if it is not available domestically or it is cheaper to buy it overseas and ship it here than it is to buy domestically. Import tariffs, in theory, are supposed to make foreign goods more expensive to buy which means the same food produced domestically should have a more competitive price which means American purchasers buy more domestic goods.

The issue with tariffs is that 40% of food grown by US farmers are sold overseas. When foreign buyers are discouraged from buying American products, American producers will need to replace them with domestic customers and increase prices. 

Grocers may have to foot the bill with higher inventory costs

When food becomes more expensive to buy, food warehousing becomes more important. If you pay more for your food and keep prices the same, it will affect your margin. But you won’t want to raise prices as it will cost your customers. A potential remedy against rising tariffs and food costs would be to change your inventory items. 

Seasonal inventory can make a difference

If a seasonal product is not available domestically, then tariffs will make it very expensive to source the same ingredient from overseas. This is where you should look at seasonal inventory items to keep costs at a manageable level. Our reporting tools can show you your inventory levels over the past few years where you can see your best selling seasonal items. Like any aspect of your business, in order to fight rising costs and potential price increases, you will need to look at your inventories and be flexible and creative to meet your needs.

FW Logistics can help

Businesses do what they can to survive and when it comes to inventory control, cold storage, you need to be flexible and creative with your solutions. This is where we can revolutionize your inventory, provide you with the climate-controlled storage you need for your food, provide you with comprehensive inventory reports, and be the cost-saving solution you need to maintain your competitive edge in today’s economy. 

Our advanced warehouse management system for food grade storage can provide stock management by inventory method, lot information, and expiration date. It allows for the complete tracking and control of products by automatically identifying multiple standards at every distribution point. It can source containers, corrugated goods, and further materials required for packaging procedures. We can revolutionize your inventory and cut your costs along every link of the supply chain. 

Call us today to find out more!

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