Will Trump’s Policies Hike Wisconsin Restaurant Prices?

Dan Jacobs preps food in the kitchen Friday, March 1, 2024, at DanDan, a Milwaukee restaurant he co-owns. (Angela Major/WPR)

Several provisions in President Donald Trump’s spending law are being touted by hospitality groups as bolstering the state’s restaurant industry. But Trump’s increase in tariffs and crackdown on immigration are causing other problems for restaurants, two people in the industry told WPR’s “Wisconsin Today.”

The One Big Beautiful Bill Act, which was signed into law on July 4, contains several spending and tax provisions. The Wisconsin Restaurant Association supports several parts of the package, including tax deductions for employees who are tipped or earn overtime pay.

Those tax cuts allow qualifying employees to not pay federal taxes on up to $25,000 of tips per year. Single filers could deduct up to $12,500 in overtime pay. Both provisions will be in effect until the end of 2028.

Wisconsin Restaurant Association Executive Vice President Susan Quam told “Wisconsin Today” the move would put more money in employees’ pockets.

“A huge portion of those positions are filled by people who want to work part time and are either putting themselves through school or bringing in a supplementary income into their family,” Quam said. “So, to be able to deduct or not have to pay income tax on that first $25,000 in tips is really, really important.”

Quam also praised other parts of the spending package, like enabling business deductions that would lower a restaurant’s effective tax rate and making existing tax credits permanent that were set to expire at the end of the year.

But Dan Jacobs, owner of several Milwaukee restaurants and a member of the Independent Restaurant Coalition, criticized the tax and spending package. He signed a letter with hundreds of other chefs nationwide denouncing various aspects of the legislation, including its impact on the environment and cuts to Medicaid and the Supplemental Nutrition Assistance Program, or SNAP.

Jacobs told “Wisconsin Today” that because Wisconsin has a tipped wage of $2.33 per hour, servers are very reliant on tips for income. The tax break on tips only covers a fraction of what salaried servers make annually, he said.

“So $25,000 is not a lot of somebody’s yearly salary. I would say (for) our servers, that’s less than half of what their yearly salary is going to be,” Jacobs said. “So they’re still going to get taxed on their tips. They’re just not going to get taxed on that first $25,000.”

Jacobs also said tax incentives favor employees in the front of the house but fail to help line cooks or dishwashers working in the kitchen.

“This is only going to help out one half of that restaurant when the other half is just left behind,” he said.

Tariffs spike costs for restaurant meals

Both Quam and Jacobs said Trump’s hike in tariffs on almost all imports —  and the president’s threats to raise tariffs higher for some countries — are affecting Wisconsin’s restaurants.

Trump has set a deadline of Friday, Aug. 1 for dozens of countries to negotiate trade deals with the United States before enacting additional tariffs. The proposed tariff rates vary by country, including a proposed 30 percent tariff on the European Union and Mexico and a 50 percent tariff on Brazil.

The U.S. Department of Agriculture reports that American food prices overall rose by nearly 24 percent from 2020 to 2024. The National Restaurant Association said food and labor costs for the average restaurant rose even higher, at about 35 percent each over the past five years.

Quam said tariff uncertainty is leading some importers and suppliers to increase prices before the onset of new tariffs, in case these taxes are quickly implemented. But she said tariffs are just one reason for the jump in restaurant meal costs.

“Unlike a grocery store, the restaurant industry has a much narrower, tight, list of products, especially in the food area that we use. A lot of those products have gone up exponentially in price,” Quam said. “Tariffs are just adding onto the top of that.”

Jacobs runs the restaurants EsterEv and DanDan in Milwaukee. EsterEv offers globally inspired dishes, while DanDan serves American Chinese food. Jacobs said implementing new tariffs would directly impact businesses like his.

“We bring in black vinegar from China. We bring in fish sauce from Thailand. These things are all going to go up in price,” Jacobs said. “Nobody really makes this in the United States.”

Quam said people can expect to see the cost of meals grow about 5 percent per year. “You’re going to see it continue to go up until some of those price increases are stabilized,” Quam said.

Immigration raids add concerns for restaurant industry

The Trump administration is causing another problem for restaurants — deporting workers that the food service industry has historically relied upon.

The American Immigration Council estimates that immigrants of all statuses make up more than 20 percent of the food service industry.

The administration set a daily quota of 3,000 arrests per day for U.S. Immigration and Customs Enforcement, or ICE. The department is currently well short of that goal, arresting about 800 immigrants a day according to figures obtained by CBS News. After a short pause on raids of farms, factories and restaurants, the agency resumed targeting these places in June.

Jacobs said his restaurants have formulated plans with staff outlining what to do if ICE agents come to the restaurant.

“That’s something that I never thought I would ever have to do,” Jacobs said. “We just want to keep our people safe, working and productive. None of the people who work for us are bad people. They’re great. They’ve worked for us for years and years. And I just want that to continue.”

Listen to the WPR report

Trump’s spending law aims to help the food industry. But Wisconsin restaurant prices are still likely to go up, industry insiders say was originally published by Wisconsin Public Radio.