Yesterday the Supreme Court ruled 6-3 that the President doesn’t have the authority to impose tariffs under IEEPA. In practical terms, the tariff regime that’s been hammering restaurant supply chains since 2025 just got invalidated. CBP collected roughly $133.5 billion in IEEPA tariffs before the ruling. Refund proceedings are expected.
Hours later, a new proclamation dropped: a flat 10% tariff on all imports under Section 122 of the Trade Act of 1974. It takes effect Monday. And it expires in 150 days.
For restaurant operators trying to plan their food costs, that 150-day clock is the whole story.
What’s Still in Place
The SCOTUS ruling didn’t touch everything. Section 232 tariffs on steel and aluminum remain at 50%. Section 301 tariffs on Chinese goods remain, including a 25% hit on seafood processed in China: cod, pollock, haddock, squid. These weren’t challenged and they’re not going anywhere.
So the picture right now: a temporary 10% blanket tariff that could vanish in July, permanent 50% tariffs on the metals that build kitchens and package food, and 25% tariffs on a significant chunk of the seafood supply chain.
The Yale Budget Lab puts the current effective U.S. tariff rate at 9.1%, the highest since 1946. That translates to roughly $800 in annual income loss per household and an estimated 0.6% consumer price increase in the short run.
Where Restaurants Feel It
Food prices are already 35-40% above pre-pandemic levels. The USDA projects dining-out inflation of 3-4% through 2026, with protein and imports carrying the most volatility.
The specific hits that matter for operators:
Protein. Canadian beef carries a 25% duty. The lean beef that gets blended into ground beef for every burger joint and casual dining concept in America comes through that pipeline. Ground beef is up 62% since January 2020, from $3.89/lb to $6.32/lb.
Seafood. One distributor reported haddock costs going from $30/case to $80/case. Frozen shrimp and tilapia are seeing some of the sharpest increases. If your menu leans on imported seafood, your food cost percentage just moved in the wrong direction.
Beverage. Imported beer faces the 50% aluminum tariff plus the blanket tariff. European wine is up as much as $7/bottle at the restaurant level. Champagne, tequila, Scotch, amaro: none of these can be domestically substituted. Draft beer prices are up $2-$4 per half liter across the board. One bar operator called it “death by a thousand cuts.”
Equipment. The 50% steel and aluminum tariffs hit everything in the kitchen. Stainless prep tables, combi ovens, refrigerators, dish machines. Opening a new restaurant or replacing aging equipment just got materially more expensive. Packaging costs are climbing too. One farm producer stopped canning tomatoes entirely and switched to selling fresh because the aluminum made it uneconomical.
The Margin Math
Here’s what I keep explaining to sellers: only 42% of restaurant operators reported profitable operations in 2025. Full-service median profit margin is down to 2.8%, from 4% in 2019. Limited-service is at 4%, down from 6%.
When you’re running a 3% margin and your food costs jump even a few points, you’re not squeezed. You’re underwater. The NRA found that 68% of operators specifically cited tariffs as a driver of higher costs in 2025. And 90% of full-service operators raised menu prices in response.
But there’s a ceiling on price increases. Consumer traffic is already softening. Darden, which runs Olive Garden and LongHorn Steakhouse, is deliberately keeping menu price increases below the rate of inflation and absorbing the margin compression rather than risk losing customers. Chipotle expects tariff impacts of about 50 basis points on cost of sales.
The independents don’t have that cushion. Sol Bashirian, who owns Sunday Gravy in Inglewood, told CBS he’s barely breaking even despite a 30% bump in sales year over year. He added a 5% tariff surcharge to every bill. That’s legal in California if you disclose it, but it tells you everything about where margins stand.
What This Means for Buyers and Sellers
The uncertainty is the real problem. The 10% blanket tariff expires around July 24. Either Congress extends it, a new mechanism replaces it, or tariffs drop. Nobody knows which. On top of that, the USMCA joint review deadline hits July 1. If the three countries can’t agree on renewal terms, a 10-year sunset countdown starts. Mexico supplies roughly half of all fresh fruits and vegetables consumed in the U.S.
Buyers are getting more selective. Bank of America expects M&A activity to pick up in 2026 after three soft years, but the bar is higher. They want clean financials, predictable cost structures, and evidence that the operator can navigate volatility. A restaurant that can show stable SDE through the tariff chaos will command a premium multiple.
Sellers who can’t demonstrate margin resilience are facing discounts or no offers at all. The bifurcation I’ve been writing about all year is accelerating: strong operators with transferable leases and documented financials on one side, struggling operators with compressed margins and murky books on the other.
Southern California businesses are mostly in “wait and see” mode after the ruling. That’s rational. But waiting too long to plan your exit strategy is how owners end up selling at the worst possible moment.
The Bottom Line
The SCOTUS ruling didn’t end the tariff story. It added a new chapter with a ticking clock. Restaurant operators now face 50% steel and aluminum tariffs with no expiration, a 10% blanket tariff with a 150-day fuse, and a USMCA review that could reshape the entire fresh produce supply chain by summer.
For owners considering a sale: document everything. Show buyers exactly how tariffs hit your P&L and exactly how you managed through it. That story is worth money.
For buyers looking at deals: the operators who adapted, who renegotiated with suppliers, restructured menus, and kept margins within range, those are the businesses worth buying. The ones who couldn’t are the ones creating the deal flow.
Businesses Mentioned