How 25% Tariffs on Brazil Could Impact American Grocery Bills
Newsweek · C · trust 56/100
0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. Brazilian goods being imported into the United States are facing new 25 percent tariffs enacted by President Donald Trump’s administration. But most Americans will see little impact on their grocery bill—at least for now.
Tariffs have become a cornerstone of Trump’s economic policy , as the president touts them as necessary to restore domestic manufacturing jobs and close the trade deficit with other countries. Critics, however, have lambasted the tariffs as a policy that would result in higher prices for American consumers.
The new tariffs against Brazilian exports went into effect on Wednesday, targeting goods including wood products, ethanol and farm machinery, reported Reuters.
The Office of the United States Trade Representative has pointed to an investigation concluding that “ Brazil ’s acts, policies, and practices have harmed American workers, businesses, and innovators for decades by restricting American exporters’ access to one of the world’s largest markets.”
The White House enacted the tariffs using the Trade Act of 1974, after the U.S. Supreme Court earlier this year rejected the widespread tariffs he previously sought to impose. The tariffs could impact up to $11 billion—or about 26 percent—of Brazilian exports, according to the country’s National Confederation of Industry.
In the short term, Americans may see little impact on their groceries due to the tariffs, Monica De Bolle, senior fellow at the Peterson Institute for International Economics, told Newsweek on Wednesday.
Most food items are included among an extensive list of exemptions from the tariffs, meaning there is not likely to be a direct impact on their pricing for now.
But that could change, according to De Bolle, noting that Brazil could retaliate against the tariffs. But even without retaliation, market forces could lead to higher prices for American consumers over time, she said.
Brazil could begin looking to sell its products to other markets that have not implemented widespread tariffs against them. That would reduce the supply of goods exported to the U.S. and put pressure on prices.
“That I fully expect to happen, with or without any retaliation, so over time, possibly, the American consumer is going to feel the effects of these tariffs,” she said. “They won’t feel it immediately, because right now those goods are exempted. Trade diversion is something that you can’t do from one day or the next. It just happens over time.”
Even if the tariffs have “no bite” immediately, they will in the medium term, she said.
There are several avenues for Brazil retaliation, De Bolle said. She described that list of exemptions as a “list of U.S. vulnerabilities” Brazil could target if they choose to retaliate against the U.S. for the new round of tariffs.
“If Brazil decided to retaliate, it could do so by targeting precisely those items,” she said.
The option that would most directly impact U.S. consumers would be if Brazil implemented an export tax on the goods currently exempted from the tariffs. These are goods that, if covered by tariffs, would have a large impact on U.S. firms and consumers.
Brazilian lawmakers could also invoke their reciprocity law, which would begin a process of public consultations to retaliate, but that would not be immediate, and they could end up putting tariffs on US imports to Brazil or suspending intellectual property obligations, which could impact American technology, pharmaceutical and agricultural industries.
Brazil is a major exporter of coffee to the United States, which does not have the geography or climate to grow it domestically. So any tariffs on coffee could be particularly disruptive.
But coffee fans won’t have to pay more for their morning brew—coffee is included on the list of exempted products.
According to a USTR release, items like instant coffee were exempted after “considering the public comments.”
The release states that comments raised concerns that Brazil is the largest global producer of unflavored instant coffee and that it is not available from domestic sources.
“These comments also maintained that alternative sources of supply cannot reliably replace the volume of unflavored instant coffee that Brazilian producers supply to the United States due to factors including the inability to meet technical specifications required by U.S. manufacturers,” the release reads.
Two food items among those exemptions are sugar and soy, so any of those exports from Brazil will be subject to tariffs. However, Americans are not likely to notice significantly higher prices on those goods.
The U.S. is also a large producer of soy, so it has options, including working to increase domestic soy production to prevent prices from soaring.
The U.S. already has a surplus of soy because of reduced Chinese purchases, David Gantz, the Will Clayton Fellow in Trade and International Economics at the Baker Institute for Public Policy, told Newsweek. He also explained why sugar prices may not increase much.
“Brazil is a major exporter of sugar to the U.S. under the quota system, but if importers seek other suppliers the U.S. government can increase other countries' quotas as necessary, probably with only minor supply chain disruption,” he said.
Most other food items are exempt, including the following popular products.
Brazilian President Luiz Inácio Lula da Silva condemned the U.S. tariffs in a June 15 statement posted on X, writing that it will “go down in the history of relations between Brazil and the United States as a lamentable milestone” and that the government “repudiates the decision announced today by the U.S. government.”
“There is no justification for unilateral measures against our country,” he wrote, pointing out that the U.S. has a trade surplus with Brazil, a contrast from other…
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