President Trump cuts tariffs to lower consumer prices

President Donald Trump on Friday exempted major agricultural imports, including coffee, cocoa, bananas and certain beef products, from higher tariffs.

The move comes as President Trump faces political backlash over high prices at U.S. grocery stores. Some distributors of beef, coffee, chocolate and other common groceries are raising prices after President Trump’s tariffs went into effect this year, adding to the pressure on household budgets from decades of high inflation in recent years.

President Trump’s action on Friday also exempts a variety of fruits, including tomatoes, avocados, coconuts, oranges and pineapples. In addition to coffee, the tariff reduction also extends to black and green tea and spices such as cinnamon and nutmeg.

The move marks a reversal for President Trump, who has argued that tariffs are necessary to protect American businesses and workers. He argued that U.S. consumers ultimately aren’t willing to pay the hefty tariffs.

The waiver comes just one day after President Trump reached trade framework agreements with four Latin American countries that include 10% tariffs on most goods from Argentina, Guatemala and El Salvador, and 15% tariffs from Ecuador. It would also specifically eliminate tariffs on products that are not grown or produced in sufficient quantities in the United States, such as bananas and coffee.

Rising food prices have taken a toll on American households in recent years. According to Consumer Price Index data, the price of eating out in September rose by about 2.7% compared to the same month last year. (More recent data was delayed due to the government shutdown).

Tariff exemptions are aimed at mitigating these food price increases, but experts warn that other factors, such as global supply shortages, will also impact prices, particularly for coffee and beef.

Get more background on how industries like beef, coffee, and cocoa are responding to tariffs and price increases.

The beef tariff exemption comes after months of rising prices, due in part to President Trump’s own tariff policies.

Over the past year, the United States has imposed steep tariffs on major supplier countries including Brazil, Australia, New Zealand and Uruguay. Brazil, the world’s second-largest beef producer, faces an effective tariff rate of more than 75% and is reducing imports to the United States as its domestic cattle herd reaches its lowest level in 75 years.

Ranchers are struggling to rebuild their herds as droughts, rising feed costs and tariffs on fertilizer, steel and aluminum drive up equipment and repair costs.

Tight supplies are fueling price increases at grocery stores, with raw beef products rising 12% to 18% in September compared to the same month a year ago, according to the Bureau of Labor Statistics’ latest Consumer Price Index report.

Producers told CNBC earlier this month that policy whiplash, from tariff changes to Argentina’s recent beef quota expansion, has further dampened long-term investment, leaving supplies tight and sentiment fragile.

The price of freshly roasted coffee in the U.S. reached $8.41 per pound in July, a record high, up 33% from a year earlier, according to data from the Bureau of Labor Statistics.

President Trump’s 50% tariff on Brazilian coffee, which supplies about a third of U.S. imports, has driven up costs across the roasting and retail supply chain. Vietnam, Colombia and other major exporting countries have also been affected by the administration’s food tariffs.

Roasters and cafes say they have no way to avoid the tariffs because they don’t produce any of the beans for U.S. consumption, leaving importers exposed to higher costs regardless of origin. According to September’s CPI report, coffee prices rose nearly 21% in August compared to a year earlier. This was the biggest increase since the 1990s.

Retailers have warned that the impact could be widespread if the tariffs continue. The U.S. Taxation Foundation estimated in August that 74% of U.S. food imports face tariffs, with duties already imposed on tea, spices and other products that, like coffee, do not have domestic supply chains.

Many products with little or no production in the United States were included in the list of items President Trump exempted from tariff increases on Friday.

Global coffee prices are hovering around the 50-year high hit in February.

Cocoa is facing similar price pressures.

Even after plunging this fall, futures are still more than double pre-pandemic levels, currently at about $5,300, hit by tariffs and three years of weather-induced crop failures in Ivory Coast and Ghana.

In October, hershey Executives said they expected tariff costs to be between $160 million and $170 million this year, on top of record bean costs and a nearly 30% year-over-year jump in retail chocolate prices in the run-up to Halloween, according to research firm Sarcana.