Food & Climate
Trump Tariffs Will Affect Nearly 75% of US food imports and food prices could rise 3.4% in the short-run, with fresh produce seeing a particularly sharp jump initially.
On August 1, tariffs on US goods imports increased for more than 80 countries.
A variety of US food imports are impacted by the tariffs, and these will likely lead to higher food prices for consumers, according to a report seen by “Food & Climate” platform.
Tariffs on the food sector will have different impacts on the US economy compared to tariffs on manufacturing inputs and consumer goods. Consider, for instance, how a domestic manufacturer of soda could respond to a tariff on aluminum.
The firm could continue to source aluminum for its cans from abroad, paying the higher import price due to the tariff. Or it could switch to the now relatively cheaper domestic supplier of aluminum.
US food imports and the ability to switch to a domestic producer
In the case of US food imports, the ability to switch to a domestic producer is not always available.
Take bananas, for example. In 2023, the US imported over $2 billion worth of bananas, mostly from Guatemala and other Central American countries.
The US has a limited ability to produce bananas, with few locations possessing the proper climate.
As land is a scarce resource, banana producers in Florida and Hawaii would not be able to expand banana production as easily to meet US demand.
The end result is that a tariff on banana imports would simply lead to US consumers paying higher prices for imported bananas, according to “Tax Founadation.org“.
Moreover, almost all of the coffee consumed in the US comes from outside the country, meaning it could soon become a bigger burden on Americans’ wallets.
Coffee from Brazil is facing 50% tariffs, Vietnamese coffee is likely to be subject to a 20% tariff.
With 15% tariffs in place on products from European Union nations, the prices of shelf staples such as Italian, Spanish or Greek olive oil could rise.
Trump has separately raised tariffs against Mexico, a major supplier of items such as tomatoes and avocados, though he has granted some key exemptions to those levies.
EU’s agreement
In April, US President Donald Trump announced he was introducing sweeping new tariffs, extra taxes that importing firms have to pay if they bring in goods from abroad.
Since then some of the US’s major trading partners including the UK, Japan and now the European Union have negotiated down the headline tariff rates. The EU’s agreement cuts in half the 30% tariff Trump had threatened.
But other countries are still facing higher rates, including Canada, which sees tariffs rise to 35% as the 1 August deadline passed.
Trump says the extra tariffs will generate billions in revenue and encourage firms to manufacture in the US to avoid the taxes.
But there are already signs that the levies may be pushing up prices for American consumers and economists argue that there is still some way to go before American shoppers feel the full force of the rises.
Still the Budget Lab at Yale estimates that food prices will rise 3.4% in the short-run, with fresh produce seeing a particularly sharp jump initially.
The US is one of Europe’s biggest alcohol export markets, with European companies, including Pernod Ricard and LVMH, selling €9bn (£7.8bn) of alcohol to the US each year. The country makes up about a third of Irish whiskey exports and almost 18% of champagne exports.
However, European Commission President Ursula von der Leyen has not said whether alcohol will be included in its tariff deal with the US or exempted along with other, unspecified, agricultural and food products, according to “BBC”.
Meanwhile, under tariffs announced in April, Mexican beers like Modelo and Corona are expected to become more expensive because of levies on aluminium, which affects beers poured from cans. Most beer in the US – 64.1% – is served out of cans, according to the Beer Institute.