Trump’s Return and Its Impact on U.S. Food Exports – Jay Lee’s U.S. Report (140)

Trump's Return and U.S. Food Exports

– U.S. Column #140 by Jay Lee

Tariff Bombs and Other Variables...FTA Benefits May Disappear

Surge in Exchange Rates Creates Profits but Puts Pressure on Raw Material Imports

Non-Tariff Barriers Increasing and Customs Delays Possible if Federal Workers Are Fired

By Jongchan Lee, CEO of J&B Food Consulting

Trump is back. In Korea, many were surprised by the prospect of Harris becoming U.S. President. In the U.S., we see a growing number of former Democratic supporters turning to the Republican side. Many are disillusioned with the Democratic Party over issues like illegal immigration, refugees, LGBTQ+ rights in schools, homelessness, and rising crime in big cities. However, from Korea's perspective, Trump's return is less than welcome due to issues like tariff increases and defense cost sharing.

Recently, K-Culture's rise has spurred explosive interest in K-Food globally. However, with Trump's return, it's uncertain where things will head next. The first concern is tariffs. Trump has announced that he will impose high tariffs—up to 60% on China, and 10-20% on other countries. In addition, due to the fentanyl crisis, he plans to add 10% tariffs on China and 25% on Canada and Mexico. While Korea currently enjoys duty-free benefits under an FTA, the U.S. may increase tariffs to protect its domestic trade interests.

Another issue involves online shopping platforms like Temu and Ali, which were exploiting an exemption on goods priced under $800 to bypass import tariffs. The Biden administration has responded by deciding not to exempt imports from China that fall within tariff categories, even if they are low-priced. Businesses that ship directly from Korea to consumers, bypassing regular customs, may also be affected.

The second issue is exchange rates. Since Trump's inauguration, the exchange rate has surged. While this creates profits for exporters, those in the food industry who rely on importing raw materials may face significant pressure if high exchange rates persist.

The third concern is the potential rise in labor costs due to the mass deportation of illegal immigrants, coupled with fears of a possible economic panic following the election. Currently, the U.S. is experiencing an economic boom that may not last, and as the economy cools, American consumers' reduced spending may impact exports as well.

The fourth issue is the possibility of increased non-tariff barriers. With stricter regulations and legislation, imports could be further restricted. Agencies like the FDA and USDA may tighten inspections, making imports more difficult. The FSMA (Food Safety Modernization Act) has been in effect for eight years, with inspections becoming stricter each year. The FSVP (Foreign Supplier Verification Program) could also make it harder for imports to pass through.

Additionally, with Elon Musk being nominated as the head of the Department of Government Efficiency, there are threats of laying off half of the 2.3 million federal workers. If this happens, agencies like the FDA, USDA, and CBP could experience delays in processing, which could result in slower law enforcement and delays in customs, causing delivery issues.

What will happen next year is uncertain. Whether it will be beneficial or harmful to K-Food remains to be seen. However, I believe the momentum for K-Food will not be easily stopped.

Tags: #Trump #FoodExports #USA

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jay@jnbfoodconsulting.com or 714-873-5566

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