Chicago-area food banks, small businesses to feel impact of President Trump's sweeping new tariffs
Economic experts, Greater Chicago Food Depository, West Side manufacturing plant expressing fears over rising costs of imports
CHICAGO (WLS) -- The impact of President Donald Trump's sweeping new tariffs is already being felt across the globe, including Chicago-area small businesses and food banks.
It was another tough day for the stock market Thursday and companies are already reacting to the tariff plan with layoffs as well as the inevitable price hikes on the way.
Coffee, electronics and vehicles are all part of this ripple effect that will become more expensive for Americans.
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The aftermath of President Trump's "Liberation Day" is being felt across the globe. Americans are now wondering how much more they'll be paying for everyday goods following the president's imposed tariffs of at least 10% on just about every other country.
"It is about at least in his view the idea that the US should be selling more abroad than it is bringing in, hence cutting down imports to ideally promote exports," said Paul Poast with the University of Chicago.
Experts said that plan will now lead to higher prices in the short term as companies push that tax onto the consumer. History shows that those prices usually don't come back down soon after that.
"Price increases tend to be very sticky, so if firms respond by raising prices and then say a month from now trump gets rid of the tariffs and say no we're not going to do tariffs anymore," Poast said. "I don't think prices are going to immediately come back down to where they were."
Coffee is one of those products that will immediately become more expensive as the U.S. imports at least 80% of its coffee beans from Latin countries like Brazil and Colombia. It's a product that needs the proper climate to produce, and with those two countries now facing 10% tariffs, coffee lovers in the U.S. will be paying the difference.
"Starbucks doesn't have a big enough inventory," Northwestern University professor Nancy Qian said. "Coffee and agricultural products, these are perishable goods, so American producers or wholesalers, they can't afford to stockpile them."
There is a similar problem for electronics as analysts at Rosenblatt Securities say an $800 iPhone could now cost as much as $1,100 with the product being imported from china.
Automakers are also grappling with 25% tariffs on foreign-made vehicles, which Canada Prime Minister Mark Carney said the country will match that tariff itself. That news forced the automaker Stellantis to temporarily pause production at two plants in Canada and Mexico, leading to 900 layoffs at U.S. plants.
Despite the immediate strain on companies, President Trump remains optimistic.
"The markets are going to boom, the stock is going to boom, the country is going to boom, and the rest of the world wants to see is there any way they can make a deal," Trump said.
The Anderson economic group in Chicago projects the lowest tariffed vehicle to still cost at least $2,500 more because of the tariffs. While the goal is to bring manufacturing to the U.S., experts said that much of that will be done by automation and robots when it happens.
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President Trump's tariff announcement is expected to have a direct impact on many foods purchased in the country. That's expected to put a strain on local food banks already dealing with recent cuts by the U.S. Department of Agriculture.
The Greater Chicago Food Depository is already seeing the impact. They said the Trump administration's cuts to the USDA will definitely have an impact, making their fight against food insecurity and hunger a little harder.
The ceiling high shelves at the Greater Chicago Food Depository are stacked full of food now, but that may change soon.
The food depository recently learned that 52 truckloads of government food expected to arrive between now and August from the USDA have been suspended. The shipments included dairy, pork, chicken, eggs along with dried fruits, valued $3.3 million.
"One in four families with children in the Chicago metro area are currently facing food insecurity," said Man-Yee Lee, Greater Chicago Food Depository spokesperson. "We are very concerned."
The cancellations are the result of a pause of the USDA's Commodity Credit Corporation, which provides discretionary funds for purchases by food banks. Looking to cut spending, the Trump administration has frozen or cancelled a billion dollars in food aid.
Food banks say the cost cutting measures jeopardize their efforts.
'When families are finding it difficult to manage their household budgets and put food on the table, our pantry lines get longer," Lee said.
Right now, the Greater Chicago Food Depository provides food to their network of more than 850 pantries and meal programs across Cook County.
Care For Real Food Pantry operates in the Edgweater and Rogers Park neighborhoods on the city's North Side. Officials there said they get over half their food donations from the Greater Chicago Food Depository and have seen a 400% increase in demand for their services since 2020.
"We don't know what the full impact will be," said Gregory Gross with Care For Real Food Pantry ."Our biggest fear is that will see more need for our services and less food at the food pantry."
Last year, while a good portion of the Greater Chicago Food Depository 's food came from purchases and donations, about a third of their inventory came from the federal government.
Advocates say the cuts put a strain on the emergency food system, adding that just buying more food to donate is not a sustainable way to address hunger.
"We really do need the support of our private and public entities in order to help make sure everyone has enough food and to feed their families," Lee said.
The Greater Chicago Food Depository said they're also concerned about what impact the government slashing will have on nutrition assistance programs like SNAP and other crucial safety net initiatives.
Representatives here at the food depository said they're talking about the cuts not to create panic, but to create awareness. They said they're already developing plans to deal with any shortages and they're also working with their partners to make sure that no one goes hungry.
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The owners of a local manufacturing company on the West Side said that employees hundred survived the Great Depression, the Great Recession, the COVID-19 pandemic, and now tries to navigate this new round of tariffs.
They are welding hoods down for part of the assembly. They will be the internal frames for buses, trains or delivery trucks seats from Freedman Seating.
The West Side manufacturer makes over 1,000 seats a day in the Austin neighborhood.
The 130-year-old company has evolved and now depends on imported parts, parts that will likely cost more with new tariffs imposed by the Trump administration.
"I like to be optimistic, but I am very very concerned about where things are going," Freedman Seating CEO Craig Freedman said.
Freedman is the great-grandson of the company's founder.
"This component comes from here this component comes from there, it's a big shock to the system," Freedman said. "We're going to have no choice but to pass this on a portion of it to our customers. It's a matter of survival."
About 75% of the 700 employees are from the West Side.
"Getting a job changed my life around," Freedman Seating welding lead Charles Johnson said. "I didn't think I'd buy my own home doing the things I see on TV."
Johnson is among the local employees. With a felony conviction, he said this job has been a lifeline. He's been at Freedman for nine years, promoted to welding lead.
He said he hopes to see more opportunities like this for folks on the West Side.
"It definitely gives them opportunity to make choices to make money and do better for themself," Johnson said.
Freedman and his family hope to continue to be a vehicle for success and navigate the new tariffs for them and their employees.
"We import products not because we want to but because we need to you just can't get here," Freedman said. "This will... be an equal, if not greater, challenge than we have ever experienced."
Freedman said he expects to have a better idea of the impact of tariffs on the business in the coming weeks.
