One big worry for economists trying to handicap Trump Administration initiatives is how tariffs, deportations, and potential tax cuts will affect consumer prices and overall inflation. Last week, the Consumer Price Index for January was reported up 3.0% from a year ago. Food away from home (+3.4%) and shelter (+4.4) were two of the larger year-over-year increases (again).

U.S. milk production was down 0.5% vs a year ago in Dec, following a 0.4% decline in Nov. Highly Pathogenic Avian Influenza in California dairy cows is the main reason. Milk output in CA (20% of total U.S.) was down 8% in Nov/Dec vs a year ago. HPAI reduces a cow’s ability to produce milk - and milk from cows with HPAI must be taken off the market.

On Saturday, Feb 1, President Trump slapped 25% tariffs on Mexican and Canadian imports. The most immediate effect on the restaurant industry, particularly at this time of year, will be on fruits and vegetables. The U.S. imported an estimated $22B+ in produce from Mexico last year. Tomatoes, avocados, cucumbers (pickles), jalapenos, bell peppers, and limes could present some of the biggest immediate cost issues.

In Friday’s cattle report, the USDA said feedlot inventories on Jan 1st were 11.82M head, down 0.9% from a year ago. New placements onto feedlots in Dec were down 3.7%. Mexican feeder cattle imports were halted on 11/25/24 due to “new world screwworm.” The situation remains unresolved, which will leave the U.S. short roughly 300,000 feeders by Feb 1.