News
Tariff threats likely to make inflationary waves
A food economist says the prospect of another trade war is weighing heavily on the agriculture and food sectors.
David Ortega with Michigan State University says even the threat of tariffs from the U.S. has the potential to create higher costs for consumers and producers.
“In my view, this is just an example of a policy that will almost surely backfire and will just contribute to the inflationary pressures that many of us have been feeling,” he says.
Coffee futures hit a record high Monday on the Intercontinental Exchange following President Trump’s dispute with Colombia over the weekend.
Ortega says consumers could see the repercussions continue ahead of Valentine’s Day.
“We import a lot of fresh and cut flowers from Colombia into the United States,” he says. “We’re coming up on Valentine’s Day, and I would say that even the threat of tariffs can be very inflationary as many suppliers start to come up with contingency plans.”
The U.S. imports nearly all its mums and carnations from Colombia and nearly 60 percent of fresh-cut roses. The country supplies the U.S. with about 30 percent of its coffee and is also a large supplier of bananas, tilapia, and avocados.
Ortega says avocadoes will be another item to watch because the vast majority are imported from Mexico.
Trump has threatened 25 percent tariffs on Mexico and Canada as early as February 1.
Perhaps this is an opportunity for American farmers . . . ?