President Donald Trump has eliminated tariffs on a wide swath of food imports, raising expectations he will reverse more trade policies in a bid to combat high prices.
The response from the White House: Don’t count on it.
According to one White House official, granted anonymity to discuss internal strategy, the administration’s new tariff cuts are entirely consistent with the president’s long-term trade agenda and do not signal a comprehensive move away from tariffs, particularly as a tool to rebuild manufacturing.
National Economic Council Director Kevin Hassett echoed that sentiment in an interview on CNBC on Monday. “This is nothing new,” Hassett said, calling the president’s executive order halting tariffs on foreign ag products “a blanket movement so that we weren’t going through each deal and picking this and that.”
What Hassett didn’t acknowledge, however, is that the tariff carve outs apply worldwide, regardless of whether or not a country has negotiated a trade deal with Trump. That includes zeroing out duties, for example, on coffee from Brazil and spices from India, which were both hit with 50 percent duties this summer as punishment for foreign policy disagreements that continue to fester.
The Trump administration has also held back on tariffs it initially promised to roll out by autumn on non-food products, such as semiconductors and pharmaceuticals, citing agreements on lowering prices and reshoring manufacturing.
It raises the question of just how firm a red line the White House is drawing on its tariff policies, which officials say are focused on manufactured goods that are core to its vision of America’s industrial revival.
“We can’t change the weather. There is no physical way for us to grow saffron, cinnamon or bananas in the U.S.,” said the White House official, ticking off some of the foreign ag products whose duties were slashed to zero Friday night.
But unlike foods that require specific temperatures and rainfall patterns, “There’s no reason why we can’t make various electronics,” in the U.S., the official argued. “The fact that we don’t have the infrastructure to make those things here, that’s why we’re doing the tariffs,”
Industries that did not receive relief on Friday remain hopeful, however, that Trump is cracking the door open to wider tariff cuts. And they are seizing on the same argument that the White House has made on goods that can’t be made in the U.S., while also pointing out the duties’ impact on consumer prices.
“Even at full industrial capacity, the U.S. can only produce about 84% of the inputs manufacturers need — meaning at least 16% must be imported for us to build more here at home,” Jay Timmons, president of the National Association of Manufacturers, said in a statement. “That’s why we’ve offered practical, pro-growth solutions that allow manufacturers to bring in non-domestically produced inputs without adding new cost burdens — while rewarding companies that invest, expand and create jobs in America.”
The alcohol industry also continues to push for Trump to zero out tariffs on foreign imports, despite being left off the list on Friday, citing the geographic aspects that go into making distinct brands — from Kentucky bourbon to French cognac.
“We’re hopeful that the approach the administration took on Friday is a building block,” said Chris Swonger, the president and CEO of the Distilled Spirits Council.
The Trump administration’s action came after Republicans were pummeled in off-year elections that focused heavily on affordability and the price of everyday goods. But while the tariff relief may make a difference for goods like coffee and tropical fruits, and will lower input costs for farmers as they make decisions for the next crop year, it won’t do much to bring down costs on clothing or consumer products — items that are in increasing demand as the holiday season approaches.
Even as Trump has personally dismissed some of the short-term pain from tariffs — in May he suggested that Americans should purchase “two dolls instead of 30” — the White House has launched a new emphasis on lowering costs in the wake of the November elections.
“When he talks about these rebate checks for lower-and middle-income Americans, I think that's one of the things he's thinking about … ‘how can we make it so that this tariff policy doesn't harm, doesn't make things less affordable for lower-income Americans?’” said Stephen Lamar, president and CEO of the American Apparel and Footwear Association, which represents brands like Calvin Klein and Carhartt.
Lamar said he has continued to try and make his case to the administration that the apparel manufacturing industry is unlikely to be scaled up in the U.S. and, in applying tariffs to clothes and shoes, the administration will drive up costs for everyday goods like T-shirts and sneakers.
“You can go outside without your smartphone,” Lamar said. “You can go outside without a toy. You don't have to drive a car. All those things are important for our consumer lifestyle and everything else, but they don't quite have the same level of everyday ‘essential’ that clothes and shoes do.”
Some business leaders have succeeded in convincing the administration to pause or soften duties on their products, at least temporarily, including the semiconductor, pharmaceutical, and auto industries.
The White House has stressed those moves are part of its “nimble” trade strategy, as Trump used tariffs as a cudgel to bring countries — and companies — to the negotiating table. Trump has credited his threat of a 100 percent tariff on name-brand pharmaceuticals for leading to a series of deals the White House has rolled out this fall to lower the price of certain prescription medicines. And the administration created a tariff rebate plan for U.S. automakers in exchange for pledges of new auto manufacturing investments in the U.S.
“The stick, so to speak, is still there,” the White House official said. “But if we can get the same result and don’t need to beat them, we’ll take it.”
At the same time, the administration is pushing to expand duties in some core parts of the industrial sector, stretching tariffs on steel and aluminum to include products that use those components, even things as far removed as baby strollers and condensed milk, worrying trading partners about the tariffs creeping into more products.
And it’s putting pressure on efforts to revitalize U.S. industrial capacity. Manufacturing employment has been contracting for nine months, construction manufacturing has been down since January and 89 percent of employers in a September survey by the National Association of Manufacturers said tariffs are driving up input costs.
The Trump administration has dismissed concerns about struggles in the manufacturing sector, suggesting that there is a lag before the investment promises Trump has received from companies and countries really start to take hold.
That view is supported by Lourenco Goncalves, the CEO of Cleveland-Cliffs, one of the largest domestic steel manufacturers. Goncalves has predicted that some manufacturing will turn around by the beginning of next year, starting with the automobile industry.
“I ship steel to the automotive [companies] every day,” Goncalves said in an interview last month. “Every day I'm looking at my shipping numbers, and I'm seeing them going up, and I know the orders are coming in.”
And while groups like the National Confectioners Association and Meat Import Council of America celebrated the administration’s decision to ax tariffs on imports of cocoa and beef, others that received relief want more. Laura Shumow, the executive director of the American Spice Trade Association, called the new exemptions on cumin, turmeric and other spices “a greatly encouraging step” because it could signal that the administration is open to eliminating tariffs on unavailable natural resources.
But Shumow noted that spices like sage, basil and mustard hadn’t made the list, and said she “hopes to continue to work with the administration to modify the list as needed to cover spices and herbs that are not grown in sufficient quantities in the U.S.”
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