Open any news site or listen to a newscast and you’d be hard pressed not to find information about the recently imposed tariffs by President Trump. Tariffs on imports between the US and Canada, Mexico, and other countries are expected to result in higher prices and reduced availability of certain products used within the industry. In the short-to-medium term, these tariffs are likely to drive inflation higher and cause disruption to the global supply chain, threatening U.S. bars and restaurants who rely on this supply chain to source the products they sell.
“The impact of tariffs on imported food will depend on several factors, mainly the country the tariff is imposed upon and the percentage of the tariff,” says David Lennarz, president at Registrar Corp, an FDA compliance and regulation company. “Since tariffs are essentially a tax paid by the U.S. importer at the time of entry of goods from overseas, the outcome will be an increase in cost. How that increase in cost burdens the importer and their upstream customers will vary based on the importer's strategy and the price elasticity of the products they sell.”
Lennarz says most importers burdened with new tariffs will pursue a “shared” strategy of negotiating lower prices with their suppliers while also attempting to charge their upstream customers a higher price.
“Restaurants and bars can prepare for increased costs by acquiring inventory now at cheaper prices before tariffs are in place, searching for substitute or alternative products, and beginning to signal to customers that price increases may be necessary,” Lennarz says.
Margie A.S Lehrman, CEO at the American Craft Spirits Association (ACSA), says that the newly imposed tariffs and subsequent retaliatory tariffs mean costs of goods increase both domestically and outside the borders where spirit exports already have limited products on shelves, or even worse, are removed.
“With glass bottles and toppers manufactured in Mexico and China, and with a healthy U.S. craft spirits clientele, it means that the cost of producing any bottle of spirit is likely to rise,” Lehrman says.
With small producers unable to take advantage of an economy of scale due to a limited number of orders or a place to warehouse inventory, bars and restaurants will likely need to pay more. As craft-produced spirits are typically more expensive to begin with, it makes getting product onto bar or restaurant shelves and on menus even more difficult.
“In addition, the tariffs mean that craft spirits manufacturers will be hurt by anticipated rising cost of inputs to manufacture craft spirits,” Lehrman says. “The items most frequently sought from these countries would include agave, sugar cane, and botanicals.”
Lehrman advises bars and restaurants to adjust their beverage sourcing strategies and buy local, focusing on craft products that are made from local grains and fruit.
“Restaurants and bars should negotiate with local purveyors of food items and drink. There is a lot available in communities that may never reach the larger distribution channels, so this is an opportunity to explore smaller scale, and oftentimes higher quality, products,” Lehrman says. “It is a chance for new menu offerings, both food and cocktails, to satisfy consumer demands for innovation.”
Lisa Hawkins, chief of communications and public affairs at Distilled Spirits Council, points out that more than 20% of restaurant sales come from the sale of beverage alcohol, making the spirits sector an important revenue driver for the U.S. hospitality industry, while supporting the success of local bars and restaurants nationwide.
“Tequila and Canadian whiskey are the two top spirits products coming from Mexico and Canada that will be impacted by any U.S. tariffs on those two countries,” Hawkins says. In 2024, the U.S. imported $5.2 billion worth of tequila and $93 million worth of mezcal from Mexico, and during the same year, the U.S. imported $622 million worth of Canadian spirits.
As Hawkins explains, while the U.S. spirits sector continues to experience a slowdown, tequila remains hugely popular in the United States. Last year, tequila sales were up 2.9%, and Mexico’s native spirit was ranked as the second top spirits category by sales and volume.
According to an economic analysis by the Distilled Spirits Council, a 25% tariff on distilled spirits imports from Mexico and Canada could lead to a loss of more than 31,000 U.S. jobs across the hospitality industry.
“A 25% tariff on spirits products from our neighbors to the north and south will hurt U.S. consumers and lead to job losses across the U.S. hospitality industry, including restaurants and bars, just as these businesses continue their long recovery from the pandemic,” Hawkins says.
As such, the Distilled Spirits Council urges restaurants and bars to encourage their state associations to join The Toasts Not Tariffs Coalition, a group of 52 associations representing the entire three-tier chain of the U.S. alcohol industry and related industries. The Coalition sent a letter to President Trump urging that wine and spirits products be excluded from any new or universal tariffs and will continue to advocate on behalf of the U.S. hospitality industry.
Embracing Creative Strategies
According to Donald Minerva, founder and owner of Scottadito Osteria Toscana, a family-run restaurant in Brooklyn, N.Y., his restaurant is currently experiencing significant increases in wine prices. This is particularly affecting the Italian restaurant, which sources wine selections internationally. Additionally, there is a general escalation in food costs across the board.
“The tariffs on China, Mexico, and Canada have had a widespread impact on import prices and supply chains. Consequently, import costs for various food products, including raw ingredients and alcoholic beverages, are on the rise,” Minerva says. “Such ingredients are crucial to our operations, as we depend on freshly imported, authentic ingredients from Italy to maintain the high standards of quality and flavor that define our Italian cuisine. Increases in tariffs directly lead to escalated costs for imported wines and specialty foods. That being said, because we hold ourselves to a standard of providing fresh and locally sourced produce, we have been focusing on maintaining strong relationships with local suppliers for vegetables, seafood, and meat.”
Indeed, going forward, the long-term effects of tariffs may prompt restaurant owners to source more locally and ethically—a strategy industry experts advise restaurants and bars embrace.
“While reducing the use of international products could be considered, our primary focus remains on maintaining our quality standards to continue offering gourmet dishes made with the freshest ingredients,” Minerva says.
For Gregg Majewski, former CEO of Jimmy John's and current CEO and founder of Craveworthy Brands, the implementation of tariffs will inevitably impact imported food costs, affecting key products such as produce, seafood, meats, and packaging materials. Many staple ingredients used in restaurants, like avocados and various spices, could see price hikes.
“For restaurants, these tariffs pose a potential challenge, one that owners and operators must approach strategically. Any increase in supply chain costs can put a strain on operators, but with the right menu and pricing strategy in place, operators can ensure they are providing the same great quality and offerings, with tactical tweaks to ingredients, size or value,” Majewski says. “Sourcing strategies will become more essential during this time, as restaurants look to find new avenues that adhere to their quality standards but will not skyrocket prices.”
Majewski advises that restaurants need to evaluate their supply chain management now and identify alternative domestic suppliers where possible. He says that building strong relationships with vendors, negotiating bulk purchasing agreements, and looking at operational efficiencies, such as reducing waste and optimizing inventory, will help mitigate the impact of any rising costs.
“Additionally, locking in contracts with suppliers before tariffs take full effect can help hedge against price increases,” Majewski says. “Restaurants will need to be creative on how to offer quality at a value.”
When tariffs are in place, restaurants must be adaptable. As Majewski explains, some will have to get creative with menu innovation, highlighting dishes that use lower-cost yet still high-quality, domestic ingredients while minimizing reliance on tariff-impacted imports. Others may adjust pricing to leverage dynamic value models or bundle menu items to maintain margins without alienating guests.
“Transparency with guests about price changes and sourcing challenges can also build trust and understanding,” Majewski says. “Long-term, these tariffs could have a wide-reaching impact on the restaurant industry’s sourcing abilities, leading to increased investment in domestic agriculture and supply chain management. Ultimately, restaurants that proactively adjust their supply chains, focus on operational efficiency, and remain flexible with their menus, will be best positioned to navigate these economic shifts. Restaurants will need to remain nimble—this is a test that the industry will need to weather collectively but will, eventually, come out much stronger on on the other end.”
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