Owners and operators of independent restaurants in New Orleans are bracing for the impact that new tariffs will have on their businesses.
This week, President Donald Trump announced new “reciprocal tariffs” for specific U.S. trade partners and a universal 10% tariff on other foreign goods.
The universal 10% tariff will take effect on Saturday (April 5). The individualized, reciprocal tariffs take effect on April 9.
Businesses buying goods from suppliers expect to take on the higher costs of importing them. For restaurants that buy a lot of food products cultivated in foreign countries, the cost of the tariffs will be noticeable.
“Our backs are really against the wall right now. We don’t really want to raise prices. But if we had to in order to stay in business, we would be forced into doing it,” said Paul Rotner, CEO of Acme Oyster House.
Prior to Trump’s unveiling of the new tariffs on Wednesday (April 2), the National Restaurant Association had predicted an estimated 30% profit loss for independent restaurant owners in the country.
“Applying new tariffs at this scale will create change and disruption that restaurant operators will have to navigate to keep their restaurants open,” said association CEO Michelle Korsmo in a Wednesday statement.
Most notably, China was hit with a 34% tariff and the European Union was hit with a 20% tariff. Together, they account for 31.9% of imported goods to the U.S, according to data presented by Trump.
Though not included among countries receiving “reciprocal tariffs,” Mexico and Canada are both subject to 25% tariffs on some items. However, the tariffs only apply to goods not compliant with the USMCA, a trade agreement passed in 2020. According to a 2019 analysis of the USMCA, most agricultural products from Mexico and Canada are compliant and thus exempt from tariffs.
Acme Oyster House sources a lot of its produce from Mexico during this time of year, Rotner said. But he’s expecting the biggest financial hit to come from higher-priced kitchen equipment. In February, Trump instated a 25% tariff on foreign steel and aluminum.
“It’s tough. We’re pinching pennies right now and it’s going to be even harder,” Rotner said.
The restaurant industry experienced similar struggles during the COVID-19 pandemic and the inflation that followed, which drove up prices for food products, causing restaurants to make adjustments to stay afloat financially.
Now faced with rising costs again, most restaurateurs are concerned about the new tariffs, said Kristin Sparks, co-owner of Annunciation Restaurant. She said she will have to scrutinize costs further and spend extra time shopping around for suppliers offering the best prices for foreign goods.
She wants to avoid passing those costs on to customers, but is grappling with the fact that it might be necessary.
“But there’s a balance, there’s a fine line between what the consumer is willing to pay,” Sparks said. “And right now, consumer confidence is also unfortunately moving on a downward track. So, they may not want to pay those higher prices.”
And the impact goes beyond just the bottom line.
“With all of those additional costs, then you start to kind of have to pivot with menu planning, changing your menu, how might it affect what you’re serving to your guests … There’s a lot that goes into it,” Sparks said.
With different suppliers offering varying qualities of food products, operators will have to decide if they want to sacrifice food quality for a lower price.
JD Eubanks, executive chef at Tujague’s Restaurant, plans to stick with purchasing high-quality ingredients, even if it means potentially raising menu prices to recover the extra money spent on higher taxed goods.
“There’s some people that don’t really have that mindset,” Eubanks said. “They’re not going to want to buy the more responsibly sourced products, and they don’t care.”
He said it’s particularly an issue when it comes to suppliers handling animals, such as dairy cows and chickens.
“You always want to serve the best, and if you want to get the best, you have to make sure it’s good quality, humanely raised,” he said. “And to get those things it costs more money to produce, because you have to do a lot more humane practices.”
And while the restaurant always tries to buy local when possible, some of the goods needed for its French-inspired menu can’t be found in the U.S., like specific cheeses used for charcuterie boards.
“Constantly – as a restaurant owner, chef, whatever it may be – you’re shopping for the best price. And tariffs, that’s going to affect a lot of those things,” he said.