President Donald Trump issued an executive order late on Friday to roll back tariffs on dozens of imported agricultural goods that aren’t made in large-enough quantities in the United States. That includes beef, coffee, avocados, and coconuts. Some of those products have gotten substantially more expensive for Americans in the past year, with beef prices up 16% and coffee prices up 19%.
The tariff rollback is a relief to companies, from restaurant chains to packaged foods makers, that have seen their input prices rise in the past few months. Among the publicly-traded companies that could benefit are Starbucks, Keurig Dr. Pepper, Shake Shack, JM Smucker, Cheesecake Factory, Vita Coco, and Chipotle Mexican Grill.
In its latest quarterly earnings report, Starbucks said its operating margins had shrunk by 5 percentage points year over year to 9.4% largely because of inflation and tariffs. A rollback of tariffs on coffee and other products like green and black tea should help the company.
Inflation has also been hurting results from Keurig Dr. Pepper, maker of the Keurig coffee pods. It’s one reason the company’s international operating income fell 4% in the latest quarter. Coffee tariffs and inflation were expected to pinch the company’s results in the fourth quarter, too. JM Smucker, which makes coffee as well as jams, has also been dealing with with inflation impacts. In the latest quarter, margins in its retail coffee segment fell by 9 percentage points.
Vita Coco, which makes coconut water and other products, has said that its imported coconut water has been hit with a blended tariff rate of about 23%. The company already increased prices in July, and was considering doing so again in the future—a move that raised the risk of driving consumers away. Vita Coco was a recent Barron’s stock pick.
Restaurant chains have also been hurt by tariffs—mostly because the levies impact their input costs.
Shake Shack, for instance, has had to deal with mid-teen percentage increases in beef prices. The company raised its prices about 2% in the company’s latest quarter, and said it sees “a challenging market for the foreseeable future on beef.”
-Cheesecake Factory has also been affected by tariffs, with the restaurant chain calling out their impact on overall consumer confidence on its latest earnings call. “Tariffs cause lower discretionary income, there’s then fewer jobs created and consumer sentiment is at a low point,” said CFO Matthew Clark.
Write to Avi Salzman at avi.salzman@barrons.com