How tariffs are affecting Latin American restaurants in the District
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Each week, Alcy De Souza treks across the Potomac River to the Restaurant Depot in Alexandria to restock on wholesale meat, produce and dinnerware for The Grill From Ipanema, a Brazilian restaurant he’s owned and operated in Adams Morgan since 1992. Recently, though, De Souza has found prices won’t stop rising.
“The meat’s going up, avocado’s going up, yuca, everything is going up — everything coming from Mexico, from Central America and South America,” De Souza says. “If it keeps this way, and the tariffs keep like that — [if] Trump keeps his word — the situation is going to be much, much worse.”
De Souza is one of many independent restaurant owners in Washington, D.C., whose restaurants are threatened by President Donald Trump’s tariff policy. Trump says he will impose a 25% tariff on all goods imported from Canada and Mexico, and varying tariffs on the rest of the world, making key ingredients in Latin American cuisine — like avocados and imported beef — more expensive for restaurant owners like De Souza.
Oscar Cruz is the executive chef and general manager at Mama Chepa Cocina Latina, a Salvadoran and Mexican restaurant he’s run in the Fort Totten area since its opening in September 2022. He says he is altering his menu because increased costs may affect his regular clientele’s ability to afford to eat at his restaurant.
“The area we’re in is not touristy,” says Cruz. “It’s a working area where people come, eat and aren’t looking for expensive items. That’s going to affect us a lot.”
Since taking office, the Trump administration’s on-again, off-again tariff policy has induced global economic turmoil and uncertainty in the stock market. After President Trump announced his sweeping “Liberation Day” tariffs on April 2, the market saw its largest one-day loss since the COVID-19 pandemic in 2020, according to CNBC. Although not all of Trump’s proposed tariffs are in effect yet, Daniel Bernhofen, a professor of international economics at American University, warns that the looming threat of a tariff war is enough to harm American consumers and businesses by driving up prices on consumer goods.
“Even anticipated tariff effects might lead to actual changes,” says Bernhofen. “There are some studies that have shown that tariff uncertainty itself can lead [to changes] because people, business people, look at expectations. If they expect tariffs to come, [that expectation] increases the prices.”
These tariffs pose an existential threat to smaller, independently owned restaurants, which, unlike other small businesses, deal in real time with changes in commodity expenses, according to the National Restaurant Association (NRA). The organization projected that a 25% tariff on food and beverage products from Canada and Mexico would cost domestic restaurants over $12 billion, cutting profits for the average small restaurant by 30%.
In a letter to President Trump (PDF) urging him to exempt food and beverage products from proposed tariff plans, Michelle Korsmo, CEO of the NRA, explained how tariffs would disproportionately affect the restaurant industry.
“Restaurants aren’t like other small businesses,” Korsmo wrote. “They run on tight pre-tax margins that average 3% to 5% and they have, on average, 16 days cash on hand. Significant cost increases are not sustainable for most restaurants.”
The District, in particular, has faced substantial economic uncertainty after Congress approved a continuing resolution that could slash $410 million from the city’s current fiscal year budget unless the House of Representatives acts on a bill already passed in the Senate, which is looking increasingly unlikely, according to ABC 7 News WJLA.
Additionally, the city’s Office of the Chief Financial Officer projects the loss of 40,000 federal jobs in the region and 32,000 total jobs inside the District over the next four years. Robert Blecker, a professor of economics at American University, believes that this will significantly affect local restaurants. Indeed, in a city where, according to the Office of Personnel Management, 43.3% of people are federal workers as of 2023, the risk seems high.
“With all the instability and the federal workforce and so forth, that’s going to have an impact on the restaurant industry, for sure,” says Blecker. “People are going to focus on saving, eating at home, cutting down on their going-out budget, cutting back on food consumption.”
The Contemporary Picture
For De Souza, the uncertainty behind the Trump administration’s tariff plans is already affecting the prices of key ingredients he needs to run his restaurant.
“In January, 30 pounds of yuca cost me 27 dollars,” says De Souza. “Today, I bought 30 pounds for 40 dollars.”
Cruz says he hasn’t personally observed significant increases in ingredient prices so far. However, he has heard about rising prices elsewhere and is bracing for things to change “very, very drastically” if tariffs are implemented.
“We don’t want to think about where we’ll end up with all these tariffs that are raising costs because if we’re being affected quite a bit now, you can’t imagine [what the situation will look like] later,” Cruz says.
Blecker says that tariffs disproportionately affect smaller, independently owned restaurants because they lack the flexibility that large-scale chain restaurants have when seeking alternative ingredients.
“They don’t have the purchasing power that a big chain restaurant like Applebee’s, Starbucks, McDonald’s, or some of these folks that buy huge, huge quantities of inputs to process into their final output,” says Blecker. “A small-to-medium-sized restaurant is not gonna have a whole lot of options when they go out and go shopping.”
Bernhofen says there isn’t much that small restaurant owners can do to mitigate the effects of tariffs. He says switching to domestically grown ingredients, like avocados, is doable, but unfeasible for most small restaurants due to higher production costs in the U.S., as only restaurants that can pay higher ingredient prices will be able to afford them.
“It’s probably not viable, because the cost is too high,” says Bernhofen.
Although it’s uncertain when President Trump’s tariffs will be fully implemented, increasing prices are already affecting how restaurateurs like De Souza and Cruz run their businesses.
Blecker says local Latin American restaurants have few options.
“Either reduce portion sizes or raise prices,” says Blecker. “It basically comes down to that in order to cut the cost of goods sold. We … That’s difficult to do.”
Cruz says he’s prepared to seek alternatives to ingredients to keep his restaurant affordable for his regulars.
“We’re going to have to improvise,” says Cruz. “When we begin to see products or ingredients from certain countries are going to affect us, we’re going to have to look for another type of ingredient, similar in price, not to have to raise prices so much on the menu, so we don’t affect our regular clients, who always come and have known us for years.”
With ever-increasing commodity prices, De Souza is also planning significant changes to save money.
“I’m going to reduce my menu, maybe half, and see where I can save some money,” says De Souza. “It’s hard to survive. That’s the situation. I believe all the businesses around feel the same way. I’ve been here for 32 years, almost 33. … When we go to the Restaurant Depot, we meet a lot of restaurant owners over there. Everybody’s complaining. It’s hard to keep running the business now.”
De Souza’s restaurant has survived turbulent times, such as the 2008 financial crisis and lockdowns during the coronavirus pandemic, but he says the Trump administration’s looming threat feels different. With the rising cost of living and restaurant prices, customers will be more reluctant to eat out frequently, he told Hola Cultura.
“People are going to think twice,” De Souza says. “At the restaurant, they have to give a tip — 18% to 20% … It’s going to be much cheaper to get the food at home, or cook … I know many people start to cook again at home.”
De Souza fears losing more employees despite already being understaffed and sometimes having to fill in gaps, such as bartending, himself. Though the future looks bleak, he says he will continue working with the available resources to make the best of the situation.
“Everything is on my shoulders,” says De Souza. “I don’t want to fire my employees. They need a job, too … We just hope for the best.”
– Story by Francisco Rodriguez
– Copy edited by Cory Perez and Kami Waller
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