Americans could soon see some goods get cheaper after President Donald Trump exempted certain agricultural imports from a set of tariffs on Friday. But any price drops likely won’t be enough to make life feel more affordable any time soon.
The executive order exempted products like coffee, beef and some fruit from Trump’s “reciprocal” tariffs, which began rolling out in April.
The new exemptions are part of what traders have dubbed TACO, or Trump Always Chickens Out, to describe times when the president backs off a policy after unintended consequences pop up. In the case of tariffs, Trump has already reversed a number of his measures, a sign that the administration is reshaping his signature economic tool.
The latest TACO comes after voters, worried about affordability, gave Republicans a drubbing in recent off-year elections.
Nevertheless, US Trade Representative Jamieson Greer said the new exemptions generally won’t help improve affordability.
“It depends on what the importers do with the tariff,” he said in a CNBC interview on Friday. “So when you look at the overall price trend, it hasn’t been because of tariffs. It’s been because of these other events going on and just supply and demand.”
But in cases where tariffs have been passed along to consumers, prices could drop, Greer said.
One potential example: bananas. American consumers are paying about 8% more for bananas than before Trump’s second term began.
The US largely imports bananas from South American countries. With bananas exempt from “reciprocal” tariffs that started at 10%, prices could go back to where they were earlier this year, said Sarah House, senior economist at Wells Fargo. But it’s unlikely to be something most consumers notice unless they’re buying bananas often, she added.
But not everyone is convinced it will even do that much.
“It is not clear that lowering tariffs will lower prices — it depends on what retailers think they can get away with. The import price of bananas has fallen since tariffs were imposed, but the US consumer price has risen,” Paul Donovan, chief economist at UBS global wealth management, said in a note last week. (The United States tracks import prices before accounting for tariffs. In some cases, import prices have fallen as exporters lower what they charge as a way to share in the tariff expense importers pay.)
The White House has ramped up its efforts to convince voters that affordability issues are just a hangover from former President Joe Biden.
“Putting Joe Biden’s inflation crisis firmly behind us has been a priority for President Trump since Day One, when he signed an array of executive orders to slash costly regulations and unleash American energy,” White House spokesman Kush Desai told CNN in a statement.
But economists generally agree that Trump’s tariffs aren’t making matters better.
And while prices normally fluctuate, especially for food, they generally get more expensive over time, House said. “That’s why this isn’t going to, I think, cure consumers’ angst about elevated prices,” she said.
