Tariffs are meant to protect American businesses, but tariffs can force businesses and consumers to pay more for imported products. Industries affected by tariffs can respond by absorbing the extra cost, increasing prices or even moving production to other countries.

It started with a 25% tariff on imported steel and 10% on aluminum from China. As a result, U.S. industry leaders say consumers could face higher costs for cars and trucks, beer and soft drinks, canned goods and more.

“Make no mistake, this is a tax on American families,” said Matthew Shay, the President and CEO of the National Retail Federation.

But how big will the impact really be?

It depends on how far it escalates. So far, the Trump administration has focused on raw materials and components. Beer makers said their cans will cost more to make. Car companies said their expenses for manufacturing vehicles will increase. But even these costs will not be felt until next year when raw material inventories begin to be replenished.

In fact, some food product prices such as soybeans will likely decrease for American consumers. Sales of soybeans have slowed since China retaliated with taxes on soybeans, pork and electric cars. Excess supply will lower food prices in some categories. U.S. fruit and nut farmers could also suffer, but President Trump has proposed $12 billion in aid to help American farmers.

Full scale trade war?

Much depends on what happens next. President Trump has threatened to increase the scope of tariffs to $450 billion if China indeed retaliates against his 25% tariff.

Currently only about 1% of targeted tariff items are consumer products thanks in part to lobbying by companies such as Best Buy. But if the trade war with China grows, it could impact categories both consumers and retailers will notice. Mobile phones, TV’s and computers represent some of the largest categories of consumer products imported from China. More than 41 percent of clothes and 72 percent of shoes sold domestically are also made in China.

Plus, the trade war could intensify with other trading partners such as Mexico, Canada and the EU. Mexico and Canada account for almost half of U.S. steel imports.

“The retail industry is extremely concerned by the administration’s apparent desire to ignite a trade war, where the net losers will be the very people the president wants to help,” according to the National Retail Federation’s Shay.

The U.S. Chamber of Commerce has also spoken out against the tariffs, saying the escalating global trade war will hurt American consumers in the long run.

Stay tuned.

Remember the excitement when Amazon acquired Whole Foods a year ago? There were huge expectations. So what’s happened so far?

First, to understand where Whole Foods is today, we need to remember that Whole Foods had been struggling before Amazon bought the company. In fact, Whole Foods had suffered two straight years of declines in same store sales as customers began to find lower priced organic and natural food products at traditional grocery stores.

Wasn’t Amazon going to slash prices at Whole Foods?

Many signature items have decreased and additional discounts are given to Prime members, but matching traditional grocery store prices will continue to be a major challenge. U.S. grocery giants Walmart, Kroger and Target have been waging fierce price battles that have only intensified with the low-price leader Aldi expanding and the arrival of their German counterpart Lidl.

Analyst Joseph Feldman, who closely follows Amazon was somewhat surprised, “I would have thought they would have lowered prices more broadly at Whole Foods. I don’t feel like they just went across the board and took prices down 20%.”

As Amazon streamlines Whole Foods operations, there will be more room to lower prices. It has already begun to centralize purchasing for its suppliers which will make it easier for new products to grow faster — although small brands may be more challenged to gain a foothold.

Traffic is up, but only slightly.

Customer traffic at Whole Foods is up 2.4% for the first half of the year. That may not seem like a lot, but for a chain that was losing customers, stopping the bleeding is a big first step. However, sales have been sluggish as customers are spending less, according to a report from Second Measure. Lower sales per customer could mean many of these new shoppers are first time tryers and not the return of regular customers lost over the past two years.

Amazon is adding Amazon Lockers to many Whole Food locations, which could drive more store visits. Customers will also find kiosks displaying Amazon gadgets such as Echo, which may trigger more impulse sales than actually drive traffic into the store.

What about online?

Surely Amazon will lead the way for online grocery shopping. The problem is that less than 4% of groceries are bought online. Consumers are slow to change their grocery buying habits due in large part to a reluctance of having someone else choose their fresh meat and produce. Whole Foods should have an edge here as their customers may have more confidence they can get consistent quality in these categories.

Another hurdle for all online grocers is the added cost of delivery which will always be a problem with the razor thin profit margin for food products.

One solution is curbside pickup known as “click and collect,” where customers order online and it’s ready for pickup when they arrive at the store. But Walmart and Kroger have a huge advantage with store pickup—far more store locations. Walmart has more than 5,000 stores nationwide, while Kroger has over 2,500 supermarkets. Whole Foods has 464 stores in the U.S.

Stay tuned.

Despite all the excitement about the potential for online grocery shopping, most consumers still prefer buying their groceries at the store. In fact, less than 4% of groceries are bought online. It’s not the fault of grocers. Most now offer online ordering for delivery or curbside pick up at the store.

So why are consumers reluctant to buy grocery products online?

Old habits die hard

The weekly trip to the grocery store is a deeply ingrained ritual. Many enjoy the hands-on shopping experience. Brick-and-mortar stores are still seen as delivering more strongly across all areas of shopper expectations, including freshness, price, personal engagement and returns.

Trust

This is probably the biggest hurdle. Most surveys indicate that “shoppers don’t trust others to pick the best or freshest items”. Allowing someone else to choose their produce and meat is hard for most shoppers. They just don’t trust others to make those choices. The grocery industry has invested heavily in online infrastructure, but hasn’t come up with a viable strategy to gain shopper trust.

What if the number of online grocery shoppers never rises above 10%?

 For most grocery retailers, whose business model is designed for brick and mortar sales, that would probably be OK. In a business of tight margins, online ordering adds costs from delivery and handling to website maintenance. But even if the percentage of online shoppers remains low, grocery retailers will still want to maximize their online market share.

So, what’s the strategy?

It appears, at least in the near term, online grocery shopping could be more of niche segment. So, category managers may need to focus their marketing strategy. For example, thirty-something Millennial families might be a good segment to target. Many have two incomes and young children. They want the convenience of grocery delivery and can afford to pay for it.

Plus, Millennials are now the largest segment of the workforce and are the driving force for growth in categories like produce. They’re more likely to be open to changing their shopping habits vs. older groups because their buying rituals aren’t as deeply ingrained.

Meal kits are popular with this group. Like online grocery shopping, meal kits might be a bit over-hyped, but consider what industry leaders are doing. Kroger has an in-house meal kit, called Prep+Pared, which it started expanding last December. Albertsons acquired meal kit maker Plated last year. Some Plated kits are available in Safeway and Albertsons stores, with a full rollout planned for later this year. Walmart is also offering meal kits on store shelves and online.

Busy Millennial parents might appreciate the ability to order a meal kit online at work and grab it at a curbside store pickup on their way home or have it delivered to their doorstep. Reach them via email. Entice them with a daily special. Build your customer base. Gain their trust. In time they may start to purchase all of their groceries online.

The opportunities are out there. Look beyond the hype. Connect the dots. Develop a niche. Be more than a category manager — be a category leader.