Tariffs drive up costs for mom-and-pop shops and restaurants

Orange chocolate is off the menu at Annie Park’s ice cream shop.

Cocoa prices were already high — and have nearly doubled amid tariff uncertainty, Park says — prompting her to make changes at Sarah’s Handmade Ice Cream, a Washington, D.C.-area chain she co-owns with her mother, Sarah.

To avoid raising prices for customers, she’s cut the store’s orange chocolate flavor and is considering eliminating other cocoa-heavy flavors or reformulating recipes to use less cocoa powder.

“We’re finding ways to be creative,” Park tells CNBC Make It. But when it comes to planning, “it’s day by day.”

The Trump administration has imposed a sweeping set of tariffs on foreign imports, including a 10% tariff on goods from most countries, up to 25% on products from Canada and Mexico, and a 145% tariff on Chinese imports. Additional tariffs on most other countries have been paused through July 8, 2025, with Trump saying he’s open to negotiations — though China remains excluded from the pause.

For small food businesses like Sarah’s Handmade Ice Cream, costs were already a concern due to persistently high inflation, and cocoa prices had been climbing even before the new tariffs were announced.

“We’re trying to decide what the best action is,” says Park. For now, the business is trying to absorb the costs, but price increases are possible: “We haven’t made that call yet.”

Other essentials are also affected. Prices for sugar and chocolate chips are up, and customized items like cups, T-shirts and aprons — mostly sourced from Chinese manufacturers — are now harder to get, Park says. While Park has tried to shift the customized items to U.S. suppliers, she says the alternatives are more expensive and come with longer lead times, making it harder to keep up with demand.

As the tariffs take effect, some vendors delay shipments as they determine who’s covering the extra costs, and that only adds to the uncertainty, she says.

Park anticipated supply chain disruptions and stocked up on nonperishables in December, even renting extra storage to get through summer. But perishables like cocoa can’t be stockpiled the same way, leaving her with fewer options as costs rise.

“You think this is a global issue,” Park says. “But on a day to day [basis], small local families are the ones paying for it.”

Ji Hye Kim, chef and owner of Miss Kim in Ann Arbor, says many of the Korean pantry staples her restaurant relies on — like sesame oil, soy sauce and fermented soybean paste — simply can’t be sourced domestically at the quality or scale she needs.

“We buy as much local American products as we can,” Kim tells CNBC Make It. “But for some, that’s not possible.”

Even when U.S. producers are available, she says, they’re often geared toward retail or gourmet markets and can’t meet the volume her kitchen needs.

That kind of squeeze is typical across the consumer goods industry, says Tom Madrecki, vice president at Consumer Brands Association.

“Especially for products that aren’t available here — coffee, cocoa, tropical fruits — a tariff is just raising a cost, and the cost has to go somewhere,” he says. “It may be absorbed partially by suppliers or manufacturers, but it doesn’t disappear.”

With costs up, Kim says she might have to raise prices, although she’s not yet certain on the exact timing. She’s previously raised prices in response to specific spikes, like in the cost of eggs, but Kim says tariffs are different since they’re so widespread. And if she raises prices too much, the customers may stop coming, she says.

“It’s like you’re trying to juggle — and somebody throws a basketball in your face,” she says.

Kim hears growing anxiety from others in the industry, she adds. At a recent chef conference she attended, “more than half” of restaurant owners in the room raised their hands when asked if they would have to raise prices due to tariffs, she says.

“I’m worried about my industry,” Kim says. “People are closing, or thinking about closing.”

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