While consumers in the US are complaining about rising food prices, prices in Latin America are falling. This has something to do with Trump's tariff policy.
In a supermarket on Avenida Bolivar in Rio de Janeiro, customers are surprised: the prices of coffee and meat are noticeably lower than before. "Finally some good news in these difficult times," Julien Freitas tells Deutsche Welle (DW).
Her assessment is confirmed by a recent study by the Institute for Statistics and Socioeconomic Studies (Dieese) and the National Supply Association (Conab). According to it, the prices of basic foodstuffs fell in August compared to July in 24 of the 27 capital cities of Brazil's federal states. Foods such as tomatoes, meat, rice and coffee became cheaper.
Customs duties as a cause of price movements
"In agriculture, we live off cycles. For example, with coffee, we had a good harvest, which of course increased supply and brought down prices. It's similar with meat: the livestock cycle is currently in a phase of high fattening cattle yields, so the domestic market is feeling the fall in prices," Leandro Diaz from the Brazilian platform AgroDeri explains to DW.
But, he adds, there is another factor: US tariffs on Brazilian products.
"Excessively high tariffs cause inflation at home and hinder competitiveness abroad," says Diaz.
In other words, consumers in the US are currently feeling the rise in prices of food on which Washington has imposed tariffs. Conversely, prices of these products are falling in the countries of origin.
"In Brazil, we have a short-term effect due to tariffs on the balance between supply and demand for items subject to tariffs, namely coffee and meat," confirms economist Douglas Eustaquio of Grupo Boticario to DW.
Products that were partially or completely intended for the American market are now staying in Brazil due to tariffs. "And that surplus supplies the domestic market." The decline in meat prices has been taking a bit longer, but prices have already fallen over the weeks and months.
Short-term price cuts, long-term consequences
A similar effect to that seen in Brazil has recently been observed in Mexico. Tomatoes have become cheaper there:
Javier Reyes Escamia, president of the regional Northern Livestock Association, told the Milenio portal: "We have high production in the region, and producers from the north of the country are trying to sell it in the central federal states instead of exporting it to the US, so the price is falling."
While consumers in exporting countries like Brazil and Mexico may enjoy lower prices in the short term, tariffs could have negative consequences in the long term, Brazilian economist Dirlen Silva tells DW:
"If a manufacturer loses access to an important market like the US, they no longer have the incentive to invest," Silva says.
This means less technology, less productivity, and even a loss of quality. Over time, production could decline and prices could rise again – to the detriment of domestic consumers.
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