Albertsons tells suppliers it is ‘not accepting cost increases’ from tariffs

BOISE – In late March, just before President Donald Trump announced his “Liberation Day” tariffs, Boise-based supermarket giant Albertsons sent a letter telling suppliers to eat the cost of any related price increases.

The letter was obtained by Matt Stoller, the director of research at the American Economic Liberties Project, an anti-monopoly nonprofit. Stoller reported on the letter in his Substack newsletter called Big, and he shared it with the Idaho Statesman.

“Dear valued supplier,” the letter began. “As you know, recent developments indicate the possibility of the United States imposing tariffs on goods imported from several countries.”

Trump dialed back the tariffs days after his announcement April 2 but left a 10% duty on almost all U.S. imports, allowing 90 days to negotiate with most of the countries targeted with a notable exception. Tariffs on China, one of America’s largest trading partners, rose to 145%.

Albertsons said in the letter that it was writing to clarify its position regarding how the tariffs should be handled in its ongoing partnerships. It told suppliers that if they wanted to raise prices, they would have to get permission first.

“Our customers rely on us for competitive pricing and quality products, and we are committed to maintaining the value proposition our customers expect,” the letter said. “Therefore, with few exceptions, we are not accepting cost increases due to tariffs.”

The letter said suppliers are not permitted to include tariff-related costs in invoices without prior authorization from the company.

It said any invoices that include such charges without prior authorization would be disputed and could result in payment delays. If a supplier faces a significant increase in costs because of the tariffs, it can request a cost adjustment for the goods supplied with 90 days advance notice.

Albertsons did not respond Monday to a request for comment.

Boise financial adviser Dave Petso told the Idaho Statesman that the company is likely trying to avoid raising its prices at the store level, which could drive customers to shop at less expensive grocery stores like WinCo. Albertsons already commands some of the highest grocery prices in the Treasure Valley.

“I think it’s nothing more than a bluster,” Petso said by phone. “It looks like they’re trying to get out front of negotiations. Albertsons certainly can’t afford to become less competitive in the marketplace.”

Ross Burkhart, a political scientist at Boise State University who studies trade policy, told the Statesman that consumers typically pay the price of tariffs, especially when it comes to businesses with relatively narrow profit margins, like those in the grocery industry.

Burkhart said tariffs artificially raise the cost of doing business, because they don’t allow market forces to dictate the terms. He expects it to take a month or two for the tariffs to become fully baked into pricing schemes.

“Certainly a company like Albertsons is entitled to ask its suppliers to not raise the costs based upon these tariffs, but somebody is going to have to deal with those costs,” Burkhart said by phone. “The risk here is that the suppliers find themselves losing money and find that their business operations are simply less sustainable or unsustainable, and they may end up going out of business. That would mean the loss of that particular product from that company.”

Albertsons is the state’s largest company and a Boise icon.

It has $79 billion in yearly sales, 285,000 employees nationwide and more than 5,000 employees in Idaho, making it the Gem State’s fourth-largest employer. It operates more than 2,200 stores under 24 banners, including Safeway. The company’s median employee earned $31,781 per year in 2023, the company said in its 2024 proxy statement. Albertsons CEO Vivek Sankaran earned 475 times that much, or $15.1 million.

Sankaran is slated to retire on Thursday. He will be succeeded by Susan Morris, executive vice president and chief operations officer since 2018. Morris also will join Albertsons’ board of directors.