Key Takeaways
- President Donald Trump has reached trade deal frameworks with four Central American and South American nations that lower tariffs on products not made in the U.S.
- Experts say the move could reduce prices for some items that had tariff-related price increases, including bananas.
President Donald Trump is lowering some tariffs, and experts say it could help reduce grocery costs. However, don’t expect prices to plummet any time soon.
On Thursday, the White House announced four framework trade deals with Central and South American nations, which aim to lower trade barriers, including some of the tariffs imposed by Trump earlier in the year. Fact sheets about the bargains did not mention specific products due for a tariff reduction, but said they would focus on items that cannot be produced in the U.S.
The new deals directly address Trump’s controversial economic policy of raising import taxes on the vast majority of U.S. trading partners. While Trump and members of his administration have insisted foreign countries are paying the tariffs, business leaders have said they’re passing them on to U.S. consumers.
Inflation has accelerated this year as tariffs took effect, and some heavily imported items, such as coffee, have seen significant price increases. Coffee prices have increased by 20% over the year as of September, according to the Consumer Price Index, and have been seized upon by tariff critics as an example of how tariffs are driving up prices.
What This Means For Your Finances
Trump’s move to lower some tariffs could lower prices for specific items, such as bananas, but is unlikely to have a significant impact on the overall cost of living, according to experts.
Speaking this week with Fox News host Laura Ingraham, Trump indicated dropping the tariffs could blunt those price hikes.
“We’re gonna lower some tariffs,” he said after Ingraham brought up the high coffee prices. “We’re gonna take care of all this stuff very quickly, very easily.”
Will It Work?
Experts said the trade deals could help alleviate some of the pressure on price increases, but are unlikely to lower prices quickly.
“While we might expect some price reductions for the affected goods, there’s no guarantee that these savings will fully reach consumers,” said Can Erbil, a professor of economics at Boston College and an expert on international trade. “Factors such as supply chain adjustments, wholesale pricing, and retailer decisions could absorb some of the benefits. Additionally, any changes on the shelves may take weeks or months to materialize as contracts and logistics adjust.”
Although the overall impact on the cost of living will be small, prices for certain products could fall noticeably, said Daniel A. Sumner, a professor of economics at UC Davis specializing in agricultural economics.
“For important foods, like bananas and other fresh produce that are primarily imported and have smaller processing and marketing costs, the percentage retail impacts will be significant,” he wrote in an email. “For others, such as beef, where the import share is small and considerable processing and marketing costs may occur in the U.S., the retail price impacts in percentage terms may be quite small.”
