President Trump eliminated tariffs on an array of Brazilian agricultural goods amid signs that high and rising prices in the U.S. for basic groceries such as coffee and beef have become a major political problem for his administration.
In an executive order signed late Thursday, Trump removed the 40% tariff he had imposed in July on all Brazilian imports as punishment for the way the country had treated Jair Bolsonaro, the right-wing populist and former president who is now serving a prison sentence for attempting to undermine an election. Last week, Trump cut a separate 10% tariff he had imposed on the country’s products. Together, the tariff reductions effectively eliminate the import taxes he had imposed on the South American powerhouse, which typically buys more from the U.S. than it sells.
In 2024, the U.S. imported more than $2 billion worth of coffee from Brazil, the world’s largest producer. It also imported billions of dollars’ worth of meat, orange juice and sugar, as well as a variety of fruit, spices and vegetables. The prices of most foods have risen since Trump took office, with coffee prices rising nearly 20%.
Spinning the cuts: The tariff reductions are a bit tricky politically for the White House, since Trump and members of his administration have insisted that tariffs do not raise prices for consumers – making it hard to explain why cutting them would make prices fall.
Earlier this week, Council of Economic Advisers Chair Kevin Hassett pushed back against the idea that Trump’s tariffs were an important factor in rising grocery prices, telling Jonathan Karl of ABC News that “the prices for those goods weren't necessarily going up just because of tariffs.” But asked if prices would remain where they are even if tariffs are cut, Hassett said with certainty that prices would fall – because the tariffs are being cut.
Commerce Secretary Howard Lutnick told Fox Business Network that Trump was reducing tariffs to make a fresh start on his trade policy. “What happened is the president said, ‘Look, it’s been six months. It’s time. Let’s just wipe the slate clean. If people haven’t made deals with these smaller countries, it’s OK. Let’s cut the price on all these unavailable natural resources, and let’s focus on affordability,’” he said.
Lutnick added that Trump will bring “all” of the prices down. “He’s going to use the power of what he has created to bring these prices down, so that by Christmas, the prices in America are lower and lower,” he said.
Trade experts, though, warn that it will take time for food prices to adjust, assuming they move lower at all, as supply chains catch up with Trump’s latest unilateral adjustments. “The effects of this executive order will not be felt by consumers for an extended period of time,” Phil Kafarakis, CEO of the food industry association IFMA, told CNBC. “We might see some relief for tomatoes and strawberries in the spring.”