Trump faces Reality, Implements Major Rollback of Food Tariffs

Rod Williams, Nov. 17, 2025- If Donald J. Trump were not an economic illiterate, he would know that a tariff is a tax and like a local sales tax, raises the price to the consumer. Maybe he does know it and thinks it is worth it to onshore production of tariffed items, or maybe he has just now learned it. If he just now learned it, he is teachable. If he knew it all along, he is a liar.

In any event, I am pleased to see President Trump reduce the tariffs on coffee, bananas, beef, tomatoes and about a hundred other common food items, including fruits, nuts and spices. I need my daily Brazil nut and I have grown fond of coffee. 

Trump has alleged for a long time that he was collecting tariffs from foreign countries. That is simply not true. The importer pays the tariff. That is not debatable; it is a fact.  It is true that an exporter may eat some of the tax, by reducing his profit margin, and so may the importer and the retailer, but most of the tax is passed on to the consumer. In any event the import tax is paid by the importer and allmost all of it is passed on the consumer. Market competition at each level of production until final purchase keeps profit margins very low.  The average profit margin for grocery stores is around 2.2%. There is little room for the grocer to absorb much of the tax. When Donald Trump brags about all of the money he has raised from tariffs, he is bragging about all of the money taken out of consumers' pockets.

Trump could have stuck to his guns, I guess, and all but the wealthy would have learned to drink coffee that was made from ground chicory. It would take a long time to onshore coffee and bananas. Maybe with Trump tacitly admitting that tariffs cause price increases to the consumer, some of Trump's supporters will stop believing everything he says. Some may; for others, there is no hope.

 

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