a day ago
- Business
- San Francisco Chronicle
Tariffs are slamming Bay Area Indian restaurants and grocers. It could get worse
During a recent lull between customers at Alameda's Shanvi Indian Kitchen & Grocery, owner Vikas Aggarwal took some time to update his prices on a point-of-sale tablet.
Sacks of basmati rice, fragrant spices and packs of frozen naan will now cost customers 10%-20% more, and prices may rise further due to the Trump administration's 25% tariff on Indian imports, which took effect Aug. 7 — and which the president has threatened to increase to 50%.
When Aggarwal buys his goods from distributors, 'Now even the invoices mention to 'please increase prices at the store,'' he said.
Indian restaurants, grocery stores and food importers around the Bay Area are beginning to feel the shock of one of the highest tariff rates placed on a major U.S. trading partner. And unlike earlier rounds of tariffs, business operators told the Chronicle they must now pass on higher prices to customers — an example of the way that sometimes delayed tariff impacts are finally catching up to U.S. consumers.
The Trump administration is justifying its tariffs on India as a sanction for purchasing Russian oil, with President Donald Trump vowing to increase tariffs further if U.S. and Indian leaders do not come to an agreement by Aug. 27.
Last year, U.S. goods imports from India totaled $87.3 billion.
San Francisco's oldest Indian grocer, New India Bazar, is preparing for that possibility. 'No deal could be signed before the deadline,' predicted owner Auro Bhatt. 'India has also got a very strong stance and the countries are not talking about a compromise.'
At his Polk Street store, customers from across the city shop for lentils, dosa batter, spices and Hindu idols. Bhatt recently received an invoice for an $800 order, with an added-on $80 tariff fee clearly itemized. He has adjusted his prices accordingly, but still opts to take small hits to prevent total sticker shock. A bag of lentils may have to go by 50 cents, for example, but he may raise the price only 40 cents.
Yet because customers often fill their baskets, the small increases add up quickly.
'It comes as a shock to them that they will be buying the same amount of items, but the total bill has gone up by a lot,' he said.
Shanvi owner Aggarwal works with around 15 distributors, which has allowed him to shop around to offset tariff-related increases. Still, he said customers are quick to express dismay at checkout.
'They'll tell me, for example, 'last time a product was $2.99, why is it $3.50 now? ''
Amod Chopra operates Berkeley's popular Vik's Chaat, as well as a wholesale distributor and market. He has been paying the extra duties to get to his shipments of saffron, beer, rice and other goods from the Port of Oakland. For some time, he did not pass on the new costs to customers, having built up an inventory brought in at a lower tariff rate. Now that these reserves have run out, he's been forced to finally raise prices.
'I don't have 10%, 25% or 50% in my margins to just eat that cost,' Chopra said. 'When the previous inventories deplete, you have no choice,'
Chopra already had to contend with higher demand and increased freight prices during the peak buying season for Indian goods earlier this summer, when tariffs were just 10%. A shipment of lentils, rice, pantry goods plus the spices he will be using at Vik's Chaat for the next year were much higher than he's paid in past years, he said. To retrieve a $66,000 shipment, he had to pay $6,600 in tariffs. That price would have been $16,500 under the new rate.
Escalating tariffs can often take several weeks to be felt, Chopra said, as the fastest sea freight route from India can take 40 days to arrive. The impact is more immediate for air freight. Shipments en route to the U.S before a tariff increase will have the lower levies, even if they land after a higher rate is in effect.
Trump has justified his tariffs, considered a form of tax, by declaring a state of emergency to bypass Congress. In theory, his goal is to increase U.S. production of goods. But the U.S. does not have the appropriate tropical climate to grow in-demand spices such as cinnamon, clove and nutmeg. India is the world's largest exporter of spices, and spice imports from India into the U.S. in 2024 were valued at more than $410 million, according to the U.S. Department of Agriculture.
Diaspora Co., one nationally acclaimed Bay Area business that imports high-quality spices from India to the U.S., was on track to turn a profit for the first time in three years in 2025. Then came the new tariffs.
If they stay in place, the company estimates it will pay $200,000 in tariffs this year, founder Sana Javeri Kadri said. Diaspora has already spent $25,000 in tariffs to date — essentially, the business' profit margin. If the 50% tariff takes effect, rather than implement a blanket price increase, the Diaspora Co. website will show customers how much tariff they're being charged per order. The 50% tariff would translate to an additional $1.50 per tin, Javeri Kadri said. This means single-origin black pepper, Diaspora's best seller, would cost $13.50, and saffron grown by a third generation farmer in Kashmir, almost $20.
'We so deeply don't want to pass on prices to consumers,' Javeri Kadri said from Mumbai, where she was on business. 'It really is a lose-lose.'
Higher tariffs are also expected to squeeze Indian restaurants.
Chef Srijith Gopinathan is perhaps the best known Indian chef in the Bay Area. At his celebrated Cal-Indian restaurant Copra, he taps into his memories to highlight the flavors of his native Kerala. He uses fresh produce and meats from Bay Area purveyors across the Bay Area, offering a break from tariffs. Still, his kitchen is filled with irreplaceable Indian ingredients and equipment like grinders and special biryani pots.
'To make a biryani, you would need cinnamon, cloves, and cardamom. Indian cooking is all about blends,' he said. 'You cannot get Basmati rice from a different country,' he went on.
Versions of the crop can be produced elsewhere, but like Champagne, it's a geographically indicated product grown on the Indian subcontinent. 'It has to be from India,' he said.
