United States Ponders Eliminating Customs Duties for Coffee and Cacao Imports
In the third week of the new administration, the trade situation is under evaluation, with significant developments unfolding. The United States is negotiating new trade agreements that could have a profound impact on the import of certain natural resources.
According to reports published in "Global Logistics" and "Daily", the new trade agreements between the United States and countries like Indonesia, the European Union, and others include provisions to exempt certain natural resources such as coffee and cocoa from import tariffs under specific conditions.
One such agreement is the Agreement on Reciprocal Trade between the US and Indonesia. This agreement outlines potential tariff reductions for commodities not naturally available in the US, and the zero tariffs for natural resources like coffee and cocoa are a part of this broader agreement. Indonesia, the world's fourth-largest coffee producer, stands to benefit from this arrangement as it will remove export restrictions on industrial commodities, including critical minerals, and open its market by eliminating 99% of tariff barriers on American industrial, tech, and agricultural products.
The exemption or substantial reduction of import tariffs on natural resources like coffee and cocoa is a strategic move by the US Commerce Secretary, Howard Lutnick, who announced that President Donald Trump has approved these zero tariffs for trade deals with nations such as Indonesia and the European Union. This applies to commodities that are not grown or produced domestically in the US, such as mangos and pineapple.
For instance, since the US produces less than 1% of the coffee it consumes, coffee imported from countries like Indonesia and Vietnam could enter tariff-free under these deals. However, it is worth noting that the largest coffee exporter, Brazil, does not yet have such a deal with the US, and a 50% tariff threat remains.
The proposed tariff reductions and exemptions are not just limited to agricultural goods. They also emphasize eliminating both tariff and non-tariff barriers, granting U.S. products better access to these markets and ensuring conditions for fair competition. This has been welcomed by U.S. agricultural sectors like dairy.
Besides Indonesia, trade agreements with countries like the Philippines and Vietnam similarly include tariff reductions or exemptions on certain key products. However, the specific details of the European Union's agreements were not found in the current search results.
It is important to note that the proposed 50% tariff on Brazilian products, linked to political tensions between the US and Brazil, could significantly impact trade between the two countries. The IndexBox Market Intelligence Platform reported that this proposed tariff could impact trade between the US and Brazil.
In addition to these trade agreements, the Trump administration is planning to renegotiate the USMCA (United States-Mexico-Canada Agreement) to protect American jobs. The exact details of these negotiations are yet to be seen.
These new trade agreements, if finalised, could reshape the global trade landscape, particularly for natural resource-based commodities like coffee and cocoa, where domestic U.S. production is minimal or non-existent.
- The strategic move by the US Commerce Secretary, Howard Lutnick, to exempt certain natural resources like coffee and cocoa from import tariffs under new trade agreements is expected to reshape the global trade landscape, particularly for businesses dealing in these commodities.
- Financial analysts are closely monitoring the renegotiation of the USMCA (United States-Mexico-Canada Agreement) by the Trump administration, as the outcome could have profound implications for business, politics, and general-news, impacting job security and market conditions within these regions.
