White House opens door to lower tariffs on some food, pharma products
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Farmers hold freshly harvested coffee berries in China. Photo: Liu Ranyang/China News Service/VCG via Getty Images
The White House says it will consider lowering tariffs on hundreds of products across sectors including food and pharmaceuticals, depending on what specific deals can be struck with trading partners.
Why it matters: As evidence mounts that inflation is creeping back into the economy, the prospect of lower tariffs on a sweeping list of grocery staples in particular could ease some of the pressure on consumers.
- Many of the other exemptions could be a boon to the healthcare industry and some manufacturers as well.
Driving the news: Late Friday night, the administration released a memo on a new tariff annex called the "Potential Tariff Adjustment for Aligned Partners" (PTAAP).
- Some or all of the products on the list "may" have tariffs reduced from high reciprocal rates to lower levels, the White House said, if countries make deals that help "mitigate the national emergency relating to the trade deficit" and address other trade concerns.
The list is broken into four broad categories:
- Some aircraft parts;
- Generic pharmaceuticals and their ingredients;
- Natural resources that can't be obtained domestically;
- Food and agricultural products where there isn't sufficient domestic supply to meet demand.
Between the lines: For consumers, the food list is perhaps the most notable, as it offers the prospect of relief on fruits (bananas, papayas, kiwi), spices (cinnamon, cardamom, mace), sweets (cocoa, vanilla) and beverages (tea, coffee), among others.
- It comes as tariff-driven inflation is already starting to show up in the food supply chain.
- Wholesale vegetable prices rose almost 39% in July, the largest increase ever recorded in the summer months.
- Wholesale coffee futures have risen 25% in the last month, in part as the U.S. imposes huge tariffs on top exporter Brazil.
Zoom in: The pharmaceuticals list is even longer, offering potential exemptions on amino acids, vitamins and other essentials.
- The natural resources list includes a wide variety of wood products (which could help furniture companies facing the prospect of new tariffs), as well as some gems.
Reality check: As the White House memo makes clear, these products will still be tariffed — just at potentially lower rates, on a case-by-case basis, depending on what deals their exporters make.
- It's not a return to the summer's "TACO trade" ("Trump Always Chickens Out"), but it does mark a step back from assurances that the new reciprocal rates imposed Aug. 1 were firm and final.
What to watch: Whether any countries step up to make deals that garner these exemptions, particularly given that most the president's tariff regime is now at risk of being thrown out by the courts.
