Quick Take
Santa Cruz County food and drink businesses are facing significant price increases due to tariffs imposed on imports from Mexico, Canada and China, affecting essential ingredients such as produce, seafood, grains and aluminum. Local establishments such as Gayle’s Bakery, Charlie Hong Kong and Fruition Brewing are already seeing rising costs, forcing them to consider price adjustments and menu changes while grappling with inflation and supply chain challenges.
From breweries and wholesale distributors to restaurants and bakeries, Santa Cruz County’s food and drink businesses are bracing for price increases on vital ingredients and goods due to tariffs on products imported from Mexico, Canada and China.
Over the past month, President Donald Trump has announced that he will implement a 25% tariff on all products coming from Mexico and Canada, and a 10% tariff on all imports from China, aiming to motivate these countries to further combat illegal immigration and drug trafficking into the U.S.
Last week, local businesses such as Gayle’s Bakery and Rosticceria in Capitola, Fruition Brewing in Watsonville and Charlie Hong Kong in Santa Cruz received notices from distributors that the cost of certain goods will go up by double-digit percentages. Some price changes were effective immediately; others could say only that their customers should expect an increase “soon.”
“It’s so unclear and stressful, and it’s hard to know which end is up,” said Gayle’s co-owner Louisa Beers. “The message from everybody is, ‘We don’t know when it’s going to happen, but we’re laying the groundwork.’”
Gayle’s uses around a thousand ingredients a day to make a wide variety of products for its bakery and prepared breakfast, lunch and dinner items, like spinach and tomato quiche, basil chicken salad and chicken schnitzel. In early March, Beers began receiving notices from vendors that prices could increase between 10 and 20%, depending on the item.
Produce from Mexico, including leafy greens, tomatoes, avocados, citrus and berries will all be affected, said Beers. She’s also prepared for a price increase on maple syrup from Canada and shrimp from Mexico. Pistachios from Mexico have nearly doubled in price, from $2.90 to $4.65 a pound, and salmon from Canada has also seen a big jump, she said.
Even before the threat of tariffs, she was grappling with an egg shortage and inflation, which drove the price of steak up $3 per pound over the past three months. “It’s so blurry because prices have been climbing, and things are climbing on top of that. We’re still reacting to the price increases from the last two years,” said Beers.
For now, prices for customers will remain the same at Gayle’s, but the combined cost increases from supply shortages, inflation and now tariffs are making Beers take a closer look at the price of ingredients across the board. “We’re just taking it one day at a time. We did take a pistachio-crusted salmon dish off our Blue Plate menu, because salmon and pistachios are both some of the most expensive things,” she said.
Carolyn Rudolph, owner of Charlie Hong Kong, is a self-described “fanatic” about sourcing quality ingredients, and traveled to Canada to personally inspect the conditions of the organic farmed salmon she now uses on the menu at her Santa Cruz restaurant. “People have a knee-jerk reaction to farmed salmon, and that is a mistake,” said Rudolph. “This farm is ‘egg to fish,’ and it’s pristine. They feed it natural food, in fresh water, and it’s certified organic.”
Salmon is more popular than chicken at Charlie Hong Kong, she said.
Rudolph imports the salmon through Santa Cruz-based Stagnaro Bros. Seafood Inc. and was notified by her distributor that it will need to increase prices by April 2, although it’s still trying to figure out how much the tariff will increase costs, she said.
Charlie Hong Kong is considering raising the price of salmon items on its menu by 6 to 8% to help absorb the cost, but is hesitant to increase it more than that. “I don’t want to price our community out of having healthy food, or price out the people who harvest our food being able to eat it,” Rudolph said. “We came up with a small increase, in order to make a small profit. It’s already very expensive.”
In Watsonville, Fruition Brewing owners David Purgason and Tallula Preston are grappling with increases on two of the most critical products at their craft brewery: malted grain and cans.
Malt is the basic building block of beer. During malting, grains such as barley and wheat are partially sprouted in order to release the plant’s sugars and then roasted for brewing. In an effort to keep their beer as organic as possible, Purgason and Preston purchase organic grain from Canada and blend it with California-grown grain. But the situation is further complicated because sometimes California-grown grain is malted in Canada, even though they’re purchasing it from an American supplier.
Their supplier, global malt roaster and distributor Soufflet Malt, has stored extra grain in the U.S. in order to prepare for tariffs, so prices haven’t increased yet. But Purgason and Preston were told by email to prepare for a price increase “soon.”
“Even as a brewery that can brew with California-grown grain and awesome local ingredients, we’re still affected by macroeconomic changes,” said Purgason. The war in Ukraine, one of the largest grain-producing countries in the world, drove up grain prices worldwide, he said: “When the price of grain goes up anywhere, it puts pressure on the rest of the supply, even if it’s not a tariffed good.”
The same is true for beer cans. Canada is the largest supplier of aluminum to the U.S. and provides around 60% of America’s aluminum. Although Fruition sources its cans domestically, its distributor, Core Cans, told the business to anticipate a 5 to 10% cost increase. “We’re sourcing American-made cans, but the raw materials are still coming from Canada and China,” said Preston.
Around 20% of the beer Fruition makes is sold in a can, and it purchases a pallet – around 5,500 cans – every six weeks. In November, each can cost 15 cents, and a lid was 5 cents.
Preston and Purgason haven’t made any changes to address these new costs, and are waiting to see what the final bills will look like. But the stress of constantly rising prices makes planning for the future difficult. Last year, they looked at their spreadsheets critically and even hired a consultant to help grapple with new costs.
“It used to be a lot easier. Now, you have to pay so much more attention to every little thing. Realistically, we don’t have the space to stock up on raw materials,” said Preston. “We still use organic and California-grown grain in our beer. That’s something we care about, but we might have to sacrifice it.”
“The business has to be sustainable for us to support sustainable agriculture,” added Purgason.
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