How U.S. Tariffs Are Affecting Restaurants and Hotels in 2026

U.S. tariffs have become a serious financial concern for American restaurants and hotels. Imported food, kitchen equipment, furniture, linens, and construction materials are all part of the hospitality industry's cost structure, and trade policy changes have made purchasing these goods more complicated and, in many cases, more expensive. For restaurant and hotel owners, the problem goes beyond the tariffs themselves. Suppliers are changing their prices, purchasing agreements are being renegotiated, and businesses are struggling to forecast costs for equipment purchases and renovations. An operator planning to open a new restaurant or renovate a hotel faces a very different purchasing environment from the one that existed just a few years ago.

The situation has also changed considerably since President Trump announced his sweeping tariffs in April 2025. Several of those tariffs have since been struck down by the Supreme Court, replaced, or modified. New tariffs have been introduced under different trade laws, and exemptions have become increasingly important. This article examines how the current U.S. tariff system affects restaurants and hotels, what it means for the broader hospitality industry, and what operators can do to protect their businesses.

1. Where U.S. Tariffs Stand in October 2026

On April 2, 2025, President Trump announced a sweeping tariff program that included a 10 percent baseline duty on many imports and higher country-specific rates. That announcement created enormous uncertainty for businesses relying on imported products. Much of that original framework is no longer in place. On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) did not authorize the President to impose tariffs. The administration subsequently imposed a temporary 10 percent tariff under Section 122 of the Trade Act of 1974, but that measure expired on July 24, 2026.

The administration has since relied heavily on other statutory authorities, particularly Sections 301 and 232. In July 2026, the United States imposed additional Section 301 tariffs on imports from 60 economies following investigations concerning their failure to prohibit or effectively enforce restrictions on goods produced with forced labor. Depending on the country, the additional duties generally range from 10 to 12.5 percent, subject to product exemptions and special rules. Certain products from the European Union, Japan, and other trading partners receive different calculations, while qualifying imports from Canada and Mexico can receive exemptions under the United States-Mexico-Canada Agreement (USMCA). Meanwhile, Section 232 tariffs continue to affect products including steel, aluminum, copper, lumber, and certain furniture.

The Congressional Research Service's October 2026 tariff report provides an overview of the principal tariff measures currently in effect. Businesses should also consult the U.S. Trade Representative's July 2026 Section 301 action and the current Harmonized Tariff Schedule before determining their exposure. There is no single tariff rate that applies to everything a restaurant or hotel imports. The applicable duty depends on the product, its classification, its legally determined country of origin, and the particular tariff measures and exemptions that apply. In some cases, additional duties are cumulative. In others, specific rules prevent overlapping tariffs. This distinction matters because operators sometimes receive price increases described simply as "tariff-related" without knowing which tariff actually applies.

2. How Tariffs Are Affecting Restaurants

Restaurants depend on imported products in ways that are not always obvious. A neighborhood restaurant serving primarily American food still purchases equipment, tableware, packaging, and ingredients through supply chains that extend around the world. For restaurants serving international cuisines, dependence on imported ingredients is often considerably greater. An Italian restaurant relies on particular cheeses, olive oils, and specialty foods. A Japanese restaurant needs ingredients and seafood that are difficult to replace without changing its menu. Restaurants serving regional Chinese, Indian, or Thai food face similar sourcing constraints. These imported products generally reach restaurants through distributors rather than through direct purchases from foreign producers. When tariffs increase the distributor's costs, some of those increases are passed along to the restaurant. The precise effect depends on the distributor's purchasing arrangements, inventory, and ability to absorb the additional expense.

Imported Foods and Ingredients

Coffee, chocolate, seafood, olive oil, spices, and specialty ingredients remain important areas of concern. However, the tariff treatment of these products has become more complicated than the original 2025 announcements suggested. The July 2026 Section 301 action includes exemptions covering certain food products, including specified coffee products and other goods for which domestic supply is limited. Some seafood products also receive exemptions. These exemptions do not necessarily eliminate ordinary customs duties or other applicable trade measures. A restaurant operator therefore should not assume that every imported food product carries the same additional tariff. Two products purchased from the same country can have different tariff treatment.

There is also a problem with assuming that domestic substitutes will necessarily cost less. If many businesses simultaneously shift purchasing toward the same American producers, increased demand can place upward pressure on domestic prices. A restaurant changing from imported Italian olive oil to California olive oil, for example, needs to compare actual delivered prices and product quality rather than assuming that avoiding an import tariff automatically produces savings.

Restaurant Equipment, Tableware, and Packaging

Imported commercial cooking equipment, refrigeration components, dishware, utensils, furniture, and packaging materials are another concern. A restaurant replacing a commercial oven or refrigeration system can face higher prices even when purchasing from an American equipment company. That equipment company may use imported components, and its suppliers may have already adjusted their prices to reflect tariffs. Restaurant owners planning renovations or new locations are especially exposed because equipment and furnishings account for a substantial portion of their opening costs. An operator negotiating a kitchen-equipment purchase should ask whether the quoted price is firm, whether it includes all applicable import costs, and whether the supplier can increase the price before delivery. These questions have become particularly important for equipment ordered months before installation.

Restaurant Prices and Profitability

Tariffs are adding to an already difficult operating environment. According to the National Restaurant Association's 2026 State of the Restaurant Industry report, more than nine in ten restaurant operators identify major operating expenses as significant challenges. The Association also reported that 42 percent of operators said their restaurants were not profitable in 2025. The latest available Bureau of Labor Statistics Consumer Price Index report shows that prices for food away from home increased 3.5 percent during the 12 months ending September 2026.

Tariffs are only one contributor to these financial pressures. Labor, insurance, rent, and energy costs also affect restaurant profitability. It would be misleading to attribute restaurant price increases entirely to tariffs. Still, tariffs make an already difficult situation worse when they increase the cost of essential products without allowing operators to increase menu prices enough to recover those costs. A restaurant can raise the price of a $25 entrée to $27, but that does not mean its customers will accept the change. Operators serving price-sensitive customers face particularly difficult decisions.

3. How Tariffs Are Affecting Hotels

Hotels face many of the same purchasing problems as restaurants, along with substantial additional exposure through construction, renovation, furniture, and guest amenities. For hotels, tariffs can influence the economics of projects years before guests arrive.

Furniture, Fixtures, and Equipment

Hotel furniture, fixtures, and equipment, commonly referred to as FF&E, are major components of new construction and renovation budgets. Beds, upholstered furniture, lighting, cabinetry, carpets, window coverings, and bathroom fixtures often contain imported materials or are manufactured overseas. Some of the tariffs affecting these purchases are quite substantial. Under the Section 232 tariffs introduced in October 2025, certain upholstered wooden furniture, kitchen cabinets, and vanities became subject to an additional 25 percent duty. Certain softwood timber and lumber products became subject to a 10 percent duty.

The administration originally planned to increase the furniture duty to 30 percent and the cabinet and vanity duty to 50 percent on January 1, 2026. Those increases were subsequently postponed until January 1, 2027, subject to further changes and applicable country-specific arrangements. The December 31, 2025 presidential proclamation, published in January 2026, explains this postponement.

For a hotel purchasing hundreds of guest-room furnishings, even a relatively modest increase in delivered costs becomes significant. A larger project involving thousands of rooms faces correspondingly greater exposure. Hotel owners should obtain detailed information about the origin and tariff treatment of furnishings before approving renovation budgets. A supplier's assurance that a product is manufactured outside China is no longer sufficient to establish that it carries a low tariff.

Hotel Construction and Renovation Costs

Steel, aluminum, copper, lumber, and construction equipment are all relevant to hotel development. Depending on the particular product, Section 232 tariffs can increase costs considerably. These costs are especially troublesome for projects already operating with narrow financial margins. A hotel development budget prepared before major tariff changes may no longer reflect what it costs to complete the project.

Consider a hotel owner planning a $10 million renovation. A 10 percent increase in the cost of a $3 million package of imported and tariff-affected materials and furnishings adds $300,000 to the project before accounting for any other changes in labor, financing, or construction expenses. That is a hypothetical illustration, not an estimate of typical tariff costs. The actual increase depends on the goods being purchased, their tariff treatment, and how much of the increased cost suppliers pass along. Developers should revisit budgets prepared before the latest tariff changes and pay particular attention to contracts allowing suppliers or contractors to increase prices after an agreement is signed.

Guest Amenities and Operating Supplies

Hotels also purchase enormous quantities of consumable goods and regularly replaced supplies. Linens, towels, toiletries, cleaning products, dishes, and guest-room accessories frequently come from international suppliers. Individual cost increases can appear relatively small but become significant across hundreds of rooms and repeated purchases. Hotels seeking lower-cost alternatives need to consider product durability as well as the initial purchase price. A cheaper imported towel that requires more frequent replacement can ultimately cost more than a better-quality product purchased at a higher price. This is particularly important for hotel operators required to maintain brand standards. Franchise agreements and management contracts may limit the owner's ability to substitute materials or amenities without approval.

4. The Impact of Tariffs and Trade Policy on U.S. Tourism

The hospitality industry's problems extend beyond the cost of imported goods. International travelers are important customers for American hotels and restaurants, particularly in major destinations such as New York, Los Angeles, Miami, San Francisco, and Las Vegas. Trade disputes, immigration policies, visa restrictions, exchange rates, and foreign perceptions of the United States all influence international travel decisions. Tariffs contribute to this environment, although they do not directly impose a tax on foreign tourists.

The tourism data show a complicated picture. According to the U.S. Travel Association's May 2026 forecast, international visits to the United States declined approximately 5.5 percent in 2025, to 68.3 million visitors. Travel from Canada was a particularly important factor. The Association forecast a recovery in 2026, with international visitor volume increasing approximately 3.4 percent. Even with that improvement, international visitation was not expected to return to its 2019 level until 2029. Domestic travel has been more resilient. The hotel industry has also shown periods of improving performance. For example, CoStar's August 2026 hotel data reported a 2 percent year-over-year increase in revenue per available room.

It would therefore be inaccurate to portray the entire U.S. hotel industry as experiencing a continuing collapse in tourism or occupancy. The effects differ substantially by location and customer base. A hotel relying heavily on Canadian visitors faces different challenges from a hotel serving American business travelers. A restaurant near an international tourist attraction is exposed to different demand pressures from a neighborhood restaurant serving local customers. Operators should examine their own visitor mix before assuming that national tourism statistics accurately describe their business.

5. Why Tariffs Continue to Be Controversial

Supporters of the administration's tariff policies argue that higher import duties encourage American manufacturing, protect domestic industries, and provide leverage in negotiations with other countries. There is an economic argument for increasing domestic production capacity in industries where the United States has become heavily dependent on foreign suppliers. There is also a significant practical problem for restaurants and hotels: these businesses must purchase goods now, while the domestic manufacturing capacity that tariffs are intended to encourage takes time to develop.

A hotel cannot postpone replacing worn-out mattresses for several years while waiting for additional American factories to open. A restaurant cannot stop purchasing ingredients that its customers expect. Whether tariffs ultimately create enough additional domestic production to offset their economic costs remains an important policy question. Their immediate effect on hospitality operators depends on how much they raise purchasing costs and whether suitable alternatives are available. For restaurant and hotel owners, the practical question is how to control those costs under the rules currently in effect.

6. What Restaurants and Hotels Should Be Doing About Tariffs

Operators have more options than simply accepting every price increase passed along by suppliers. The appropriate response depends on whether the business imports goods directly or purchases them from American distributors.

Review Purchasing Contracts and Supplier Price Increases

Before accepting a tariff-related price increase, ask the supplier to identify the products affected and explain the basis for the increase. If a supplier seeks to raise the price of imported hotel furniture by 20 percent, for example, the buyer should determine which tariff applies, whether the product qualifies for an exemption, and whether the supplier has already priced the relevant duties into its original quotation. For future purchases, agreements should specify which party is responsible for import duties and what happens if tariffs change between contract signing and delivery.

Price-adjustment provisions deserve particular attention. A supplier should not have an unlimited contractual right to increase prices based on vaguely defined government charges. At the same time, hotel and restaurant operators should recognize that suppliers cannot necessarily absorb every tariff increase. A workable agreement allocates that risk expressly rather than leaving the parties to fight about it after the goods have been ordered.

Examine Tariff Classification and Available Exemptions

Companies importing goods directly should have their tariff classifications reviewed, especially for products subject to substantial additional duties. The United States classifies imported products under the Harmonized Tariff Schedule. The classification determines the ordinary duty rate and helps establish which additional tariff measures apply. Incorrect classification results in either overpayment or underpayment of duties. Underpayment can also expose the importer to penalties.

The July 2026 Section 301 tariffs include numerous product exemptions. Qualified goods from Canada and Mexico also receive important protections under the USMCA. These rules can provide meaningful savings, but eligibility must be established with proper documentation. Where classification or origin is uncertain, importers can seek a binding ruling from U.S. Customs and Border Protection. For companies with significant import volumes, having an experienced customs professional review their principal products is often money well spent.

Diversify Suppliers Without Violating Customs Laws

Restaurants and hotels should evaluate suppliers in different countries, including domestic suppliers, but decisions should be based on actual delivered costs and product quality. A restaurant buying European specialty foods should compare alternative suppliers without assuming that every imported substitute has the same duty rate. A hotel purchasing textiles from China should evaluate suppliers in other markets, including Mexico and Peru, while examining the applicable tariff and origin rules. Merely purchasing goods from a supplier located in a lower-tariff country does not establish that those goods originate there for customs purposes.

If goods manufactured in China are shipped through Mexico and then exported to the United States without qualifying processing, their legal origin does not automatically become Mexican. Our firm has written extensively about the risks of this practice. See Tariffs Are Now a Fraud Risk: How Importers Can Avoid CBP and DOJ Trouble. Any sourcing change intended to reduce tariffs needs to comply with the applicable rules of origin. The consequences of getting this wrong can be far greater than the tariffs a company was trying to avoid.

Review Available Customs Savings Strategies

Larger restaurant groups, hotel companies, and businesses importing substantial quantities of equipment or furnishings should consider whether they are using all available lawful customs savings opportunities. These include appropriate tariff classifications, valid product exclusions, preferential treatment under trade agreements, and customs valuation methods supported by the underlying transactions. Some businesses benefit from foreign-trade zones or bonded warehouses. Duty drawback provides relief in certain qualifying circumstances, although it is generally of limited use for goods imported for domestic consumption and never exported.

For businesses purchasing imported goods through intermediaries, the first-sale rule can sometimes reduce the value on which customs duties are calculated. Its use requires a qualifying transaction and adequate supporting records. Our article, After the Wall Street Journal Calls: Why Tariff Reduction Is Not a One-Hour Fix, explains why these strategies require careful legal and factual analysis.

Review Potential Refunds of the Invalidated IEEPA Tariffs

The Supreme Court's February 2026 decision also created a potential recovery opportunity for businesses that previously paid IEEPA duties. Following that decision, the U.S. Court of International Trade issued orders addressing refunds of unlawfully collected IEEPA tariffs. U.S. Customs and Border Protection has developed a system known as Consolidated Administration and Processing of Entries (CAPE) to process refund requests through its Automated Commercial Environment. The October 5, 2026 Federal Register notice describes the process and the government's efforts to handle the unusually large volume of refunds.

Businesses that imported substantial quantities of goods during 2025 or early 2026 should review their customs records and determine whether they paid affected duties. Restaurants and hotels purchasing imported goods from domestic distributors are in a different position. The importer of record, rather than the ultimate purchaser, is generally the party entitled to receive the customs refund. Whether a distributor must pass any recovered amount along to its customers depends on the parties' agreements and the surrounding circumstances. Businesses should preserve their import records and promptly review applicable filing requirements and deadlines with their customs professionals.

7. The Most Important Purchasing Decision Is Often Made Before the Goods Are Ordered

There is a tendency to treat tariffs as an issue for accountants or customs brokers to resolve after a shipment arrives. By then, many of the most important decisions have already been made. A restaurant group negotiating a long-term contract for imported kitchen equipment should address customs costs before signing. A hotel operator purchasing furniture for a renovation should determine whether a proposed alternative changes the product's country of origin, tariff treatment, or compliance with brand requirements.

The same applies when replacing a foreign supplier. A product quoted at a lower factory price can ultimately cost more once shipping, duties, quality-control expenses, and delivery delays are taken into account. Purchasing managers should compare total delivered costs instead of focusing only on the supplier's quoted price. For businesses planning major investments, it also makes sense to consider what happens if the applicable tariff changes again. Contracts with foreign suppliers should deal expressly with price adjustments, responsibility for customs charges, and delays caused by changes in import requirements. A good contract will not eliminate tariff risk, but it can prevent that risk from turning into an expensive dispute.

8. How Harris Sliwoski Helps Restaurants and Hotels Address Tariff Problems

Harris Sliwoski's international trade lawyers work with companies facing tariff and customs compliance problems, including businesses seeking lawful ways to reduce their import costs. For restaurant and hotel operators, this work includes reviewing tariff exposure, identifying applicable exemptions, evaluating supply chain changes, and helping structure agreements with domestic and international suppliers. Our hospitality industry lawyers also assist with the contracts and business arrangements that determine how these added costs are allocated.

The right approach depends on the business. A single restaurant purchasing through American distributors has different needs from a national restaurant group importing equipment directly. A hotel owner renovating one property faces different issues from a developer furnishing several new hotels. The first step is to understand what the business is purchasing, where those goods originate, which tariffs actually apply, and who is contractually responsible for paying them.

Tariff rates will continue to change, and some of the current measures remain subject to legal challenges or further negotiations. Restaurants and hotels cannot control those decisions, but they can make better purchasing and contracting decisions once they understand their exposure. For operators facing substantial increases in imported goods costs, getting that analysis right can make a meaningful difference to profitability.