Sure, the economic crisis with Mexico and Canada was averted – at least for 30 days – but the threat of hefty tariffs on our neighboring counties remains. And what’s the trade off?
If you believe that improving security at our borders will make enough of a difference to largely prevent the migration of illegal entrants into the U.S. or if you feel that the flow of fentanyl and other dangerous substances will be greatly slowed by posting troops at the border, there’s an underground tunnel in Laredo, TX that I’d like to sell you.
For the 50 years that I’ve written this column, I’ve rarely delved into politics, and although some will believe this is a hit piece against Trump, it’s not. This is a policy issue not a political one.
Most of us can agree that the southern border situation needs radical improvement and that more aggressive action is needed. Additionally, there are huge trade deficits between the U.S. and Canada and Mexico (and most of the free world for that matter) that Trump wants to narrow. His goals are noble, but his methods are just wrong.
For the past two years, the American economy – despite strong numbers and a very healthy stock market – has been on an emotional tenterhook. Especially when it comes to food prices.
Retailers know that prices remain (and are also perceived to be) high despite mitigating inflation. Simply stated, consumers have shaky confidence in the American economy (one of the prime reasons that Trump was elected again).
Currently, more than 60 percent of our produce comes from Mexico and at this time of year almost all avocados and tomatoes are imported from our southern neighbor. As of 2023, we imported nearly $500 billion worth of goods from Mexico, while exporting approximately $365 million worth of products. A mutual 25 percent tax on those goods would only send both economies reeling.
Trump has said the impact from increased prices would likely be short-term, but ask retailers and customers how easily they would swallow $3 avocados?
While the impact from taxing Canada for their “transgressions” might not be as impactful on grocery products as Mexico, more than 30 percent of meat and meat products consumed in this country are produced in Canada. We also import a lot of Canadian grain. Along with increased food prices, a 25 percent tariff on oil will send gas prices skyrocketing in parts of the U.S.
And the only thing that might upset and impact Americans more than high food prices is paying $4 a gallon at the pump.
I hope I’m wrong, but I see the tariffs coming. Along with significantly higher prices on goods imported from our neighboring counties, you can count on a certain amount of product hoarding and a return to significant out-of-stocks on those items targeted to be taxed. Perhaps not at the levels during COVID, but enough to adversely affect business.
I know there are lots of people who believe that Trump’s strongarm, no-nonsense tactics are what’s needed to improve America.
Maybe he’ll ultimately be right, but from a policy perspective, potentially adding a significant economic burden to American consumers is a lose/lose proposition.
‘Round The Trade
Just because Whole Foods lost its first union election in its history at the company’s flagship store in Philadelphia’s Spring Garden neighborhood, doesn’t mean the stores employees will become officially organized anytime soon. After gaining National Labor Relations Board (NLRB) approval to file for an election at the company’s Pennsylvania Avenue store in November, associates approved unionization by a 130-100 vote margin late last month. “We are ready to bring Whole Foods to the bargaining table to negotiate a fair first contract that reflects the workers’ needs and priorities,” Wendell Young IV, president of the UFCW Local 1776 told Reuters. But even Young knows that getting over the finish line will be a long and arduous process. Nearly three years earlier, parent company Amazon lost an election over a company fulfillment center in Staten Island. Even after several losing NLRB appeals and countless delays, that facility remains unorganized. Expect more “stallball” before (or if ever) that high-volume WFM operates as a union shop.
At Costco, after being threatened with a strike by about 18,000 organized Teamsters in six states – including New York, New Jersey, Maryland and Virginia – the successful club merchant and the labor group agreed on a tentative new deal. As for the majority of its workforce which is non-union, associates at the top of the pay scale will receive a $1 per hour wage increase next month (to $30.20 per hour), followed by additional $1 per hour raises in 2026 and 2027. Employees at the bottom of the scale will receive wage increases of 50 cents per hour, which will bump their hourly rate to $20.
Walmart is also giving its market managers (the equivalent of a district manager) a big bump in pay. Those approximately 440 market managers could earn as much as $620,000 annually if performance bonuses are met. The move falls in line with other Walmart compensation increases issued over the past year to store associates and store managers at its approximately 4,600 U.S. locations. The new arrangement will begin this month at the start of the “Behemoth’s” fiscal year.
From the polar opposite department comes word that Walgreens has suspended its quarterly shareholder dividend, claiming it need the capital to refinance debt (again) and pay for ongoing litigation. Walgreens has issued a quarterly dividend to its shareholders since 1933. Ouch!
Local Notes
It looks like frozen food product will soon be leaving Ahold Delhaize USA’s (ADUSA) new automated frozen food depot in Mountville PA (near Lancaster). That facility, which was built in partnership with logistics firm Americold, went offline almost a year ago when software issues derailed the execution of its initial draying plan to about a third of Giant Food’s approximately 170 stores. Now the issues seem to have been resolved, and products are being received at the new warehouse with the hope that the facility will be fully operational by spring. It is designed to serve both Giant Food and The Giant Company. Also delayed because of the software snafus was a second Americold facility in Plainville, CT which will service both the New England and New York divisions of Stop & Shop. Americold agreed to build the two frozen distribution centers at a cost of $336 million in return for 20-year contracts with the four ADUSA divisions.
Thumbs up to the great FMI team for hosting another excellent “Midwinter” conference. The four-day confab held again this year at the J.W. Marriott in beautiful Marco Island, FL (where the weather was much improved from 2024), proved again to be the best networking show in the biz featuring top-to-top talent in the retail, wholesale, distributor, manufacturer and food broker channels. If I had one request (and not a new one at that), I’d like to see more direct engagement at the speaker sessions from retailers rather than a bunch of tech wizards filling my plate with the many nuances of AI. I get it, tech is important and companies like Oliver Wyman and Accenture are paying a lot of the freight to subsidize Midwinter. Speaking for only myself, a little more retailer balance would make many of the sessions I attended more connective.
A few obits to report this month: Harriet Finkelstein has passed away at the age of 85. She was the widow of David Finkelstein, the former iconic food broker who passed away in 2021. Harriet was almost like a family member to me – her warmth and charm certainly helped David achieve some of the successes he had as a leading sales figure in the B-W market. And her philanthropy, especially in helping the Foundation for Fighting Blindness (originally called the Retinitis Pigmentosa Foundation) raise millions for research and therapy. I mourn the passing of Harriet Finkelstein, a beautiful person with an electric smile who lived life the right way.
We have also lost three gifted people from the music business. Marianne Faithfull first gained fame as the girlfriend of Rolling Stones’ frontman Mick Jagger. From Jagger she also gained a song – “As Tears Go By” – that would prove a hit (the Stones also had a hit with that tune that was co-written by Keith Richards) and begin a career that would span nearly 60 years as a singer (22 albums) and an actress. And while her relationship with Jagger was brief, her influence on the Stones was profound. Faithfull contributed to classic songs such as “Sympathy for the Devil” and “Wild Horses,” and co-wrote the dark and haunting “Sister Morphine.” In 1994, Faithfull penned her autobiography, a raw honest overview of her life which included being born into royalty, her time with Stones and her substance abuse addictions and countless rehabs. Marianne Faithfull was a tormented but talented soul. She passed away late last month in London at age 78.
Also leaving us was one of the most influential keyboard players of the 1960s – Barry Goldberg. The musician, who grew up in Chicago and was friends with other great contemporary ChiTown greats such as harmonica player Paul Butterfield and guitar god Mike Bloomfield, never became a superstar but developed into a much sought after session player. An early studio gig developed into the opportunity to play piano in Bob Dylan’s band that appeared at the 1965 Newport Folk Festival, when Dylan played his first electric set (Bloomfield played lead guitar). Two years later, Goldberg and Bloomfield would create one of the early “supergroups,” teaming with Chicago-born lead singer Nick Gravenites and great drummer Buddy Miles to form the Electric Flag. During a long career, Goldberg, 83, also played with Steve Miller, Mitch Ryder, the Byrds and Leonard Cohen.
And while Goldberg was an excellent keyboardist, he wasn’t quite in the same league as Garth Hudson, who until his passing last month at the age of 87, was the only remaining member of one of the greatest musical groups of the past 60 years – The Band. Hudson, like four of the five Band members, grew up in Canada, and was the only member of the group to be classically trained (in fact, when the group was first forming in the early 1960s, he collected money from Levon Helm, Robbie Robertson, Rick Danko and Richard Manuel to prove to his mother that was out at night giving piano lessons). Whether it be on piano, Lowrey organ, accordion or saxophones, Hudson was a virtuoso. The opening of the great Band song “Chest Fever” features Hudson playing Bach’s Toccata and Fugue in D minor, before veering off in multiple directions. On their hit son, “Up on Cripple Creek,” it was thought for years that just before the bridge, Hudson played the Jew’s (jaw) harp to create the song’s unique funky sound. Years later, he revealed that he used an early version of a clavinet (an electric keyboard instrument). Unlike the other four members, Hudson never sang and wrote very few songs, but his craftsmanship and musical chops were a key reason that The Band’s music was so admired by the group’s peers and remains timeless today.
