Food & Agriculture Groups Urge Exemptions for Tariffs Impacting Consumers and Manufacturers

As the debate over tariffs heats up, food and agriculture organizations are raising their voices in unison, urging the Trump administration to reconsider blanket tariffs that threaten the stability of both consumers and “iconic American manufacturers.” Their concerns underscore a critical dilemma: while tariffs aim to protect domestic markets, their side effects could inadvertently undermine the very industries they seek to bolster.

Unpacking the Executive Order on Tariffs

In an executive order released Wednesday, President Trump announced the implementation of a 10% tariff across all countries effective April 5. But that’s not all. Additional, customized tariffs targeting nations with which the U.S. has significant trade deficits will take effect starting April 9. Here’s a snapshot:

• Reciprocal tariffs reach as high as 49% on specific countries:
  • EU: 20%
  • China: 34% (10% on top of an already imposed 20%)
  • Vietnam: 46%
  • Thailand: 36%
  • Japan: 24%
  • Cambodia: 49%
  • South Africa: 30%
  • Taiwan: 32%

Such punitive measures are predicated not only on monetary levies but also on non-monetary trade barriers, making it harder for American goods to penetrate these markets.

Exemptions to Consider

What’s intriguing is the list of goods not affected by these tariffs. Items already subject to Section 232 tariffs, including steel and aluminum, along with essential supplies like copper and pharmaceuticals, are exempt. Additionally, goods compliant with the US Mexico Canada Agreement (USMCA) escape tariffs entirely, although non-compliant goods will face a hefty 25% tariff.

President Trump has reserved the right to modify these tariffs, stating that they will remain in force until he determines that the associated threats are sufficiently addressed. He has suggested that tariffs may be increased if trading partners retaliate.

Calls for Reassessment from Key Industry Stakeholders

Consumer Brands Association: ‘Fine-Tune This Approach’

In a press statement shortly after the executive order, Tom Madrecki, Vice President of supply chain resiliency at the Consumer Brands Association, implored the administration to "fine-tune" its tariff strategy. Madrecki remarked that the consumer packaged goods industry mainly manufactures its products in the U.S. But some critical ingredients simply cannot be sourced domestically. "No amount of tariffs will bring these inputs back to the U.S.," he noted.

Madrecki emphasized that well-meaning policies could inadvertently increase costs and limit access to affordable products if they don’t account for ingredient availability.

National Association of Manufacturers: Raising Alarm Bells

Jay Timmons, President and CEO of the National Association of Manufacturers, echoed similar sentiments, warning that the tariffs could jeopardize investment, jobs, and supply chains. Many manufacturers already operate on thin margins, and increased tariffs could threaten their viability.

"Minimizing tariff costs for manufacturers,” he advocates, “is crucial for America to maintain its competitive edge on the global stage."

Retailers: Protecting Family Budgets

In a striking statement, Michael Hanson, Executive Vice President at the Retail Industry Leaders Association, warned that blanket tariffs do nothing to protect families or foster innovation. Instead, they threaten to destabilize the U.S. economy.

“These newly announced tariffs – combined with expected retaliatory tariffs on American businesses – risk doing lasting damage to our economy,” said Hanson. He urged the administration to reconsider before families feel the pinch in their budgets.

Fresh Produce: A Call for Exemptions

Cathy Burns, CEO of the International Fresh Produce Association, emphasized that many fruits and vegetables cannot be produced year-round in the U.S., suggesting that imposing tariffs will only heighten grocery prices without promoting domestic growth. She advocates for exemptions for fresh produce and florals, highlighting the need for regulatory reform and a secure agricultural workforce.

Potential Effects on Dairy and Trade Wars

Becky Rasdall Vargas, Senior Vice President of trade and workforce policy at the International Dairy Foods Association, warned against the “broad and prolonged tariffs” that threaten the stability of American dairy producers and consumers, stressing the danger of creating uncertainty in rural communities.

Sophia Murphy, Executive Director at the Institute for Agriculture and Trade Policy, succinctly points out, “There are no winners in trade wars.” Drawing from past experiences during the first Trump administration, she reminds us how rapidly escalating tensions can devastate farmers reliant on foreign markets.

Looking Ahead: A Complex Future

As the landscape surrounding tariffs continues to evolve, stakeholders from various sectors emphasize the need for a more tailored approach to avoid unintended consequences on American industries and consumers.

For further reading:

• Trade War 2.0: Strategies to Navigate Tariff Whiplash – Rabobank
• IATP: Trade Policies and Agriculture
• Trump’s Tariffs Won’t Help US Agrifood Industry – Commentary

Navigating the tumultuous waters of international trade is complex, and as we continue to dissect the implications of tariffs, one thing is clear: Every decision counts.