Trump reduces tariffs in attempt to reduce consumer prices

President Donald Trump on Friday exempted key agricultural imports such as coffee, cocoa, bananas and certain meat products from their higher tariff rates.

The move comes as Trump faces political blowback over high prices at American grocery stores. Some distributors of beef, coffee, chocolate and other common foods have raised prices as Trump's tariffs were imposed this year, adding to the pressure on household budgets created by decades-long high inflation in recent years.

Trump's action Friday also exempts a variety of fruits, including tomatoes, avocados, coconuts, oranges and pineapples. In addition to coffee, tariff reductions extend to black and green tea, and spices such as cinnamon and nutmeg.

The move marks a change of course for Trump, who has insisted that the tariffs are necessary to protect American businesses and workers. He has maintained that American consumers ultimately will not pay the higher tariffs.

The exemptions come just a day after Trump reached trade framework agreements with four Latin American countries, including 10% tariffs on most products from Argentina, Guatemala and El Salvador, and 15% on Ecuador. It also eliminates tariffs specifically on products that are not grown or produced in the United States in sufficient quantities, such as bananas and coffee.

Rising food prices have hurt American households for several years. Consumer Price Index data shows that household food prices rose about 2.7% year-over-year in September. (The most recent data was delayed due to the government shutdown.)

Tariff exemptions aim to help moderate these food price increases, although experts warn that other factors, such as global supply shortages, also influence prices, especially for coffee and beef.

Here's more information on how industries like beef, coffee, and cocoa have reacted to tariffs and rising prices.

The tariff exemption for beef comes after months of price increases linked in part to Trump's own tariff policy.

Over the past year, the United States has imposed high tariffs on major suppliers, including Brazil, Australia, New Zealand and Uruguay. Brazil – the world's second largest beef producer – has faced effective tariff rates exceeding 75%, reducing imports to the United States just as the country's cattle herd hit its lowest level in almost 75 years.

Ranchers have struggled to rebuild their herds amid drought, higher feed costs and tariffs on fertilizer, steel and aluminum that have made equipment and repairs more expensive.

Short supply has caused prices to rise at grocery stores, with raw meat products rising 12% to 18% year-over-year in September, according to the most recent Consumer Price Index report from the Bureau of Labor Statistics.

Producers told CNBC earlier this month that policy effects, from changing tariff rates to the recent expansion of Argentina's beef quota, have further cooled long-term investment, keeping supplies tight and sentiment fragile.

Prices for roasted ground coffee in the United States hit $8.41 per pound in July, a record high and a 33% increase from a year earlier, according to data from the Bureau of Labor Statistics.

Trump's 50% tariff on Brazilian coffee – which supplies about a third of US imports – raised costs in the roasting and retail supply chains. Vietnam, Colombia and other large exporters have also been affected by the government's food tariffs.

Roasters and coffee shops say they have no way to avoid the tariffs because the United States does not produce any of the beans it consumes, leaving importers exposed to higher costs regardless of their origin. The September CPI report found that coffee prices rose nearly 21% in August from a year earlier. That was the biggest jump since the 1990s.

Retailers have warned that the impact could have spread if the tariffs remained in place. The Tax Foundation estimated in August that 74% of U.S. food imports faced tariffs, already affecting tea, spices and other products that, like coffee, do not have a domestic supply chain.

Many of those products that have little or no American production were on the list of items that Trump exempted from higher tariffs on Friday.

World coffee prices are hovering around a 50-year high reached in February.

Cocoa has faced similar price pressures.

Even after a sharp sell-off this fall, futures are still at more than double pre-pandemic levels, and today cost about $5,300, following tariffs and three years of weather-induced crop failures in Ivory Coast and Ghana.

In October, Hershey Executives said they expected $160 million to $170 million in tariff spending this year, on top of record bean costs that sent retail chocolate prices nearly 30% higher than a year earlier before Halloween, according to research firm Circana.