Proposed SNAP Cuts Threaten Low-Income Households and Retailers Across the U.S.

In a move that could significantly impact millions of low-income American families and the retail sector, House Republicans have proposed slashing up to $230 billion from the U.S. Department of Agriculture’s budget over the next decade. The brunt of these reductions would fall on the Supplemental Nutrition Assistance Program (SNAP)—formerly known as food stamps—a critical lifeline for over 42 million Americans.

The proposal, which aims to reallocate federal spending toward tax cuts, represents a seismic shift in how the government supports food security. If enacted, this would be the largest inflation-adjusted reduction to the program in its history, three times deeper than any previous cut, according to advocacy group UnidosUS.

Retailers on Edge

The financial ripple effects of these proposed changes stretch far beyond grocery aisles. Retail giants like Walmart, Dollar General, and Kroger—heavily reliant on SNAP-backed spending—could face substantial declines in sales.

Currently, SNAP accounts for roughly $112.8 billion, or 4% of total U.S. food expenditures, as per USDA data. For Walmart alone, the country’s largest grocer and top SNAP destination, nearly 26% of SNAP shoppers shop consistently. Retail analytics firm Numerator reports that SNAP households spend 20% more monthly than their non-SNAP counterparts due to larger household sizes.

If SNAP funding shrinks, many shoppers may pivot to cheaper, private-label alternatives, or reduce their purchases entirely—forcing retailers and food manufacturers to recalibrate their strategies.

Health-Driven State-Level Restrictions

Simultaneously, at least 11 states, including Arkansas and Indiana, are advancing proposals to restrict SNAP purchases of sugary beverages and junk food, a shift encouraged by the Trump administration. The initiative, dubbed "Make America Healthy Again" (MAHA) and spearheaded by Health and Human Services Secretary Robert F. Kennedy Jr., aims to combat chronic disease by reshaping nutritional habits.

While the USDA under Secretary Brooke Rollins appears willing to grant waivers enabling such changes, legal hurdles and administrative costs could stall implementation. Moreover, critics argue these policies veer into government overreach, dictating how low-income individuals shop for food.

Merideth Potter of the American Beverage Association voiced concern, stating, “You're not cutting the program, you're just deciding what certain people can and cannot purchase—picking winners and losers in the grocery store.”

Corporate Vulnerability

Food and beverage companies face direct exposure to SNAP policy shifts. General Mills, with its strong cereal line, stands to lose the most, followed by J.M. Smucker, bolstered by its sweet snack brands, and Tyson Foods, which supplies meat and frozen foods.

Even beverage titans like Monster Beverage, Coca-Cola, and PepsiCo could see a dent in sales. USDA figures show 5% of SNAP spending goes directly to soda, and nearly 9% to sweetened beverages overall. Analysts at Citi Research estimate these changes could clip about 1.5% from global beverage sales.

Strained Households, Broader Impacts

In fiscal 2023, 1 in every 8 Americans—about 42.1 million individuals—relied on SNAP. With inflation driving up grocery prices and incomes stagnant, households are already forced to make difficult trade-offs.

Todd Vasos, CEO of Dollar General, highlighted the trend: “Our customers report worsening financial conditions, with many sacrificing even on essentials.”

Walmart CFO John David Rainey echoed this sentiment, noting fluctuating consumer behavior due to declining sentiment and broader economic uncertainty. Recent tariffs on consumer goods are adding another layer of pressure on family budgets.

Economists warn that reduced SNAP funding may not only hurt low-income families but also stall economic activity. Lauren Bauer, a fellow at the Brookings Institution, explained that SNAP functions as a stimulus tool in downturns, driving retail and agricultural transactions.

“If grocery money dries up, households might start cutting back on rent, electricity, or skip healthier food options,” Bauer warned. “SNAP has historically been expanded—not cut—during hard times.”

A Murky Path Ahead

Despite the Trump administration’s enthusiasm, states still face a complicated path to changing SNAP rules. Previous efforts to ban sugary snacks have failed due to cost concerns and logistical hurdles. Any changes would require cost-neutral pilot programs, evaluations, and risk judicial review.

The broader economic ramifications remain unclear. The USDA has not disclosed how much revenue retailers generate from SNAP, and the Supreme Court ruled in 2019 that such figures could remain confidential, shielding major grocers from public scrutiny.

But what’s evident is that shrinking SNAP could reshape both the grocery landscape and the daily lives of millions of Americans. As Congress deliberates the farm bill and reconciles differing proposals, the stakes for retailers, policymakers, and SNAP recipients alike couldn’t be higher.