What is a tariff?

A tariff or duty (the terms are used interchangeably) is a tax levied by governments on the value including freight and insurance of imported products. Different tariffs applied on different products by different countries. Another resource: What Are Tariffs and How Do They Work? (AP News)

How do tariffs work?

Tariffs directly impact the price of imported goods, which can lead to higher consumer prices and can alter trade dynamics and international relations. They also are used to indirectly protect domestic industries by making foreign products less competitive. Therefore, while being a source of revenue tariffs also can protect domestic industries, counteract unfair trade practices, and act as leverage in negotiations. Another resource: What Are Tariffs and How Will They Affect Us (University of Virginia)?

Why is President Trump imposing tariffs on U.S. trading partners?

President Trump is threatening to impose tariffs as part of his concerns about reducing the flow of fentanyl into the U.S. as well as to fight illegal immigration. He also is a strong proponent of tariffs to reduce the trade deficits between the United States and other countries, which he believes harms American manufacturing and jobs (including those in the food industry). Notably, the new tariffs against China are on top of previous tariffs he enacted during his first administration. Another resource: Fact Sheet: Trump Imposes Tariffs on Imports from Canada, Mexico and China (The White House Website)

Who pays for tariffs?

Tariffs are paid for by the importing entity - and therefore the threat of tariffs can have a significant impact on members of Food Shippers of America (FSA). Foreign countries and their companies do not directly pay the tariffs. Another resource: What Are Tariffs, How Do They Work and Who Pays for Them? (Fox Business)

What size of shipments are subject to tariffs?

The additional tariffs on China, Mexico and Canada reportedly include a provision that will eliminate a long-standing rule that allows small packages destined for individual use to enter the U.S. without a paying a tariff. This rule (the “de minimis” exemption that applies to packages worth less than $800) is used commonly by Chinese e-tailers to sell goods at lower prices by shipping them directly to consumers in the United States, according to Bloomberg. However, this exemption does NOT impact the food industry but rather tends to focus more on household goods and apparel.

How is the food industry significantly impacted by these new tariffs?

Much of the food products imported into the United States cannot be produced domestically because of climate conditions or crop seasonality. Currently, approximately 17% of all food and beverages consumed by Americans are imported, according to the U.S. Department of Agriculture (USDA). Therefore, food shippers would be wise to carefully consider how tariff requirements will impact their processes and overall business.

To what extent will tariffs impact the food industry?

According to the USDA, the U.S. imported more than 20 million metric tons of agricultural products worth more than $40 billion from Canada in 2023. More than 16 million metric tons of agricultural goods worth more than $45 billion came from Mexico that same year.

Some of the largest categories of food imports from Canada include grains (U.S. $9 billion), oilseeds ($8 billion), food grade oils ($6 billion), vegetables ($5 billion) and cocoa ($2 billion).

Some of the largest categories of food imports from Mexico include fruits (U.S. $10 billion), vegetables ($10 billion), malt beverages ($6 billion), distilled spirits ($5 billion), grains ($3 billion), and sugar ($2 billion). Another resource: United States Department of Agriculture

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