Grocery anxiety nudges aside tariff policy, in win for consumers
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President Trump's tariff policy was always in tension with domestic economic policy — the risk of higher costs versus the promise of lower prices — but as long as inflation remained under control, the tariffs mostly won out.
- With questions of domestic affordability now threatening the president politically, at least some tariffs are fair game.
The big picture: The Trump administration is feeling a pressure point that the Biden administration knew well.
- Inflation rates don't matter, price levels do — and you can't easily convince people your policies are working when they're paying 15% more for a hamburger or 20% more for a cup of coffee.
- The president may say he doesn't want to "hear about the affordability," but his economic team has been all over the airwaves in recent days assuring Americans that high prices are a Biden legacy that will come down by next year.
Driving the news: The administration said Thursday it would lift tariffs on coffee and other products from Argentina, Ecuador, El Salvador and Guatemala under new trade deals, a day after Treasury Secretary Scott Bessent promised action on key grocery items not grown in the U.S.
- The White House had said in early September that such relief might eventually be possible, on a country-by-country basis and depending on what deals could be struck.
Between the lines: Coffee prices in particular were already going to soar this year given the weak crops in Brazil, the world's largest producer.
- Then the administration slapped huge tariffs on Brazil and Colombia, which account for more than half of U.S. imports by weight.
- In the last Consumer Price Index, the price of coffee rose more, year over year, than any other good or service tracked by the government.
The intrigue: A senior administration official acknowledged Thursday that the structural issues in the coffee market were hard to address, but suggested the tariff relief could potentially help somewhat, if passed along by wholesalers and retailers.
- Industry experts were quick to agree. "Lower tariffs may help at the margins, but consumers shouldn't expect a big drop in prices because the climate risks pushing coffee higher are unchanged," Francisco Martin-Rayo, CEO and cofounder of Helios AI, a food chain supply management company, tells Axios via email.
- Martin-Rayo noted that the countries getting tariff relief only account for about 7% of U.S. imports, blunting any impact.
Reality check: The administration's primary stated goal with tariffs was always industrial — re-shoring manufacturing and creating jobs.
- There was never any intent to cover America with coffee or banana plantations, or to use trade policy to move grocery prices.
- Easing off on food tariffs doesn't interfere with the goal of getting automakers or drug companies or chip manufacturers to build here instead of abroad.
Yes, but: The move is still an acknowledgement of sorts — that Americans pay at least some of the cost of tariffs, that tariffs have affected food prices, and that changing trade policy is one way to help fix the problem.
For the record: The White House, in a statement, said fighting high prices has been Trump's priority since he took office.
- "Since then, inflation has cooled and prices of many household essentials such as eggs, gas, butter, rice, and fresh fruits have come down. The Administration will continue to implement a nuanced, nimble, and multi-faceted economic agenda to deliver more relief for the American people and restore American Greatness," spokesman Kush Desai said in a statement.
The bottom line: Coffee might get a little cheaper soon, but consumers winning one price battle won't end the trade war.
Kelly Tyko contributed.
