US Tariff Monitor – Going bananas over food prices

Sweeping tariff exemptions for food products, alongside a US-Switzerland trade deal, will lower the overall US effective tariff by 0.6ppts to 12.8%. Consumer sentiment is highly sensitive to changes in food prices. However, there are limits on how much the administration can influence grocery prices.

• Most of the reduction is attributable to the carveouts for agricultural imports.
• The US macroeconomic implications are minor, and the resulting reduction in inflation next year is no more than just a handful of basis points.
• Consumer sentiment is highly sensitive to changes in food prices.
• India and Brazil are candidates for near-term tariff reductions, and another round of tariff exemptions for food products is a possibility.