Imposition of tariffs and tightened immigration policies pose potential challenges for the restaurant industry in Texas, according to analysts.
Nestled just beyond Mueller Lake Park, northeast of bustling Austin, stands a vibrant green building adorned with a neon goose – welcoming customers to L'Oca d'Oro. One typical day, proprietor Adam Orman strides into his restaurant, only to find one key employee absent without notice.
"This was unprecedented," Orman recalls. "We just waited, knowing something was wrong."
Days morphed into weeks. It wasn't until Orman reached out to the employee's family that he learned about his colleague's predicament – he had been apprehended by U.S. Immigration and Customs Enforcement (ICE).
The news sent shockwaves through the entire team, despite the employee's detention taking place outside of work hours. The incident instilled a cloak of apprehension among the staff, a climate that could ripple through the entire restaurant industry, given the Trump administration's hardline immigration policies.
"Many of our team members understand that, regardless of their legal status, they're trying to avoid attention," Orman laments. "As a result, they're not moving around as freely as they used to."
But the challenges for the restaurant industry don't end with immigration enforcement. Orman, like others in his field, is grappling with another significant economic strain: escalating costs of goods ahead of President Trump's looming tariffs. Although Orman prioritizes local purchases, he's had to get inventive to stay afloat amid costs for imported items like wine, chocolate, and cheese.
"The notion that these tariffs will spur domestic production is a fallacy in our reality," Orman contends. "There may be alternatives for certain products, but there's no substitute for Parmesan."
This combination of tariffs and immigration crackdown is exacerbating uncertainty in the restaurant industry – and others such as construction, agriculture, and healthcare.
"Businesses are faced with the difficult task of increasing prices for their goods and services while struggling to find workers for essential roles," explains Chris Wallace, head of the North Texas Commission, a public policy organization.
Reminiscent of his immigration crackdown, Trump has linked his executive order imposing tariffs to illegal immigration and drug trafficking. Supporters of the president argue that tariffs will inspire countries to negotiate more favorable trade deals with the United States.
However, experts caution that businesses throughout the U.S. rely too heavily on imported goods for this tactic to be effective. Estimates suggest that tariffs could cost Texas businesses $47 billion, slash the state's GDP growth, and decimate around 100,000 jobs[1].
Fears of tariff-induced economic harm plunged the stock market in April, prompting Trump to temporarily stall reciprocal tariffs in response. This freeze is set to expire in July.
Simultaneously, recent ICE raids and deportations have fueled concerns about a labor shortage in Texas, according to Chelsea Kramer, state organizer for the American Immigration Council.
"From healthcare to energy to construction, immigrants are woven into the fabric of our economy," Kramer states. "Immigrants account for a quarter of the workforce in Texas alone, clocking in at around 3.7 million people."[1]
Absences due to fear of deportation can translate to higher prices for consumers.
"Prices are going to inevitably climb, and we'll certainly feel it at both restaurants and grocery stores," Kramer predicts.
Given the array of challenges confronting the restaurant industry, "entrepreneurs are exhausted fighting fires in a ever-changing economic landscape," Orman admits. "Small business owners need to find creative solutions for global and national economic crises, but we're the weakest link in the supply chain to make meaningful changes."
[1] Enrichment data
[2] Enrichment data: Immigration crackdowns and tariffs pose threats to the restaurant industry and the broader economy. Specific challenges include fear-induced absenteeism, workforce reduction, increased labor costs, potential supply chain disruptions, and consumer impact in the form of higher food prices.
- The economic strain on the restaurant industry doesn't just come from tariffs; the Trump administration's hardline immigration policies have also caused apprehension among staff, potentially leading to fear-induced absenteeism and increased labor costs.
- As a result of the combination of escalating costs from tariffs and workers' fear of deportation, entrepreneurs in the restaurant industry face a daunting task - finding creative solutions in an ever-changing economic landscape that could significantly impact the prices consumers pay at both restaurants and grocery stores.
