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Life these days is expensive. The lingering effects of the pandemic, Russias invasion of Ukraine, higher fuel and energy prices, and extreme weather shocks throttling the supply chain have conspired to make many everyday necessities much less affordable. Rising food costs in particular have become a source of financial stress for millions of U.S. households. Though overall inflation has cooled from a record peak in 2022, food prices increased nearly a quarter over the past four years and are expected to continue to climb. So far this year, Americans have faced a nationwide bird flu outbreak, propelling the cost of eggs to record levels, while rising temperatures and erratic rainfall across Western Africa are escalating chocolate prices to new highs. Years of drought in the U.S. have also contributed to historically low levels of cattle inventories, hiking up beef prices. The result is skyrocketing supermarket bills, tighter household budgets, and dwindling access to food. President Donald Trumps latest trade decisions arent likely to help the situation. Amid a flood of announcements about federal funding freezes, food program terminations, and mass government layoffs, the president has been issuing on-again, off-again sanctions aimed at the United Statess biggest trading partners. In the span of a single week, he enacted blanket tariffs against goods from Mexico, Canada, and China, exempted some products under the United States-Mexico-Canada trade agreement, and then doubled tariffs on China before threatening a new set of taxes on Canadian products. On Tuesday, he ordered his administration to double duties on Canadian steel and aluminum imports, which he subsequently walked back to 25% before those snapped into effect Wednesday morning, prompting immediate retaliation levies from Canada and the European Union. The pendulum-like nature of Trumps trade policies, economists told Grist, almost certainly means higher grocery store prices. It has already spooked financial markets and prompted major retailers like Target CEO Brian Cornell to warn that if some of the promised tariffs go into effect, customers could see sticker shock for fresh produce within days. When it comes to extreme weather shocks, which are destroying our supply chains, climate change is increasing prices and creating food inflation, said Seungki Lee, an agricultural economist at Ohio State University. If policymakers dont fully account for that by adjusting trade policies, he said, then to some degree, we will see the compounding impacts of tariffs and climate change-related shocks on the supply chain. Tariffs, or taxes charged on goods imported from other countries, are typically a negotiation tactic waged by governments in a game of international trade, with consumers and producers caught in the crosshairs. When goods enter a country, tariffs are calculated as a percentage of their value and paid by the importer. The importer may then choose to pass on the cost to consumers, which, in the case of something like fresh fruit grown in Mexico, often ends up being everyday people. Given the extent of the United Statess dependence on Canada, Mexico, and China for agricultural trade, farmers, analysts, business leaders, policymakers, and the general public have all raised concerns over the effect of tariffs on grocery store prices and the possibility of trade wars slowing economic growth. During the first Trump term, levies on China triggered retaliatory tariffs that decimated agricultural exports and commodity prices, costing the U.S. agricultural industry more than $27 billion, which the government then had to cover with subsidy payouts. To date, the U.S. has not fully recovered its loss in market share of soybean exports to China, its biggest agricultural export market. An analysis by the National Bureau of Economic Research, a nonprofit organization, found that the 2018 trade war with China was largely passed through as increases in U.S. prices, reducing consumers income by about $1.4 billion per month. Rural agricultural sectors in the Midwest and the mountain west were hit harder by Chinas retaliatory tariffs than most others, the analysis found. This time around, Trump appears to have doubled down on the tactic, though the demands and messaging of his tariff policy have remained wildly unpredictable, with economists dubbing the president an agent of chaos and confusion. All told, China, Canada, and Mexico supplied roughly 40% of the goods the U.S. imported last year. In 2023, Mexico alone was the source of about two-thirds of vegetables imported to the U.S., nearly half fruit and nut imports, and about 90% of avocados consumed nationwide. Without factoring in any retaliatory tariffs, estimates suggest that the levies imposed by Trump last week could amount to an average tax increase of anywhere between $830 and $1,072 a year per U.S. household. Im a little nervous about the increase in tension, said Lee. It could lead to an immediate shock in supermarket prices. Canada and China have since responded with tariffs of their own. Canadas tariffs imposed last week amounted to nearly $21 billion on U.S. goods, including orange juice, peanut butter, and coffee. China imposed 15% levies on wheat, corn, and chicken produced by U.S. farmers, in addition to 10% tariffs on products including soybeans, pork, beef, and fruit that went into effect on Monday. Meanwhile, Mexico planned to announce retaiatory tariffs but instead celebrated Trumps decision to postpone. On Wednesday, in response to Trumps steel and aluminum tariff hike, Canadian officials announced a second $20.7 billion wave of duties and the European Union declared it would begin retaliatory trade action next month for a range of U.S. industrial and farm goods that includes sugar, beef, eggs, poultry, peanut butter, and bourbon. With Trumps planned tariffs, Americans can expect to see fresh produce shipped from Mexicosuch as tomatoes, strawberries, avocados, limes, mangos, and papayas, as well as types of tequila and beerbecome more expensive. Other agricultural products sourced from Canada, including fertilizer, chocolate, canola oil, maple syrup, and pork are also likely to see cost hikes. New duties on potash, a key ingredient in fertilizer, and steel used in agricultural machinery coming from Canada could also indirectly elevate food prices. Many of these products, such as avocados, vegetable oils, cocoa, and mangoes, are already seeing surging price tags in part because of rising temperatures. Though theres no shortage of questions surrounding Trumps tariff policy right now, James Sayre, an agricultural economist at the University of California, Davis, said that even this current state of international trade uncertainty will lead to a higher grocery cost burden for consumers. All of this uncertainty is really bad for businesses hoping to import, or establish new supply chains abroad, or for any large-scale investment, said Sayre. Just this degree of uncertainty will increase prices for consumers and reduce consumer choice at the supermarket . . . even more than tariffs themselves. All the while, climate change continues to fuel food inflation, leaving American consumers to foot the bill of a warming world and the cascading effects of an administration seemingly set on upending global trade relations. It is actually a little bit hard to anticipate what we can expect from the current administration when we are seeing the burden of food inflation by tariffs or trade, and also at the same time, we have climate-related shocks on the supply chain, said Lee. Hopefully we will not see an unexpected compounding effect by these two very different animals. Ayurella Horn-Muller, Grist This article originally appeared in Grist, a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Sign up for its newsletter here.
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China has ordered banks and other financial institutions to encourage more consumer financing and use of credit cards as part of a campaign to get people to spend more. The order Friday from the countrys financial regulator is part of the ruling Communist Party’s latest push to build more confidence among consumers who are opting to save rather than spend, worried over jobs and the outlook for the economy. It said banks should lend more and also find ways to help borrowers who run into difficulties. Share prices in China surged following the notice from the National Financial Regulatory Administration. Officials are due to hold a briefing on Monday on efforts to increase spending and investment, factors considered crucial for keeping the economy on track following the setbacks of the COVID-19 pandemic, when millions of people lost jobs and many companies went out of business. The Chinese economy, the world’s second-largest, has been growing recently at about a 5% pace, according to official statistics. But worries over jobs and the burden of healthcare and education have left many Chinese unwilling to spend much, hobbling a major driver of business activity. A prolonged downturn in the property market triggered by government efforts to rein in excessive borrowing by real estate developers has also weighed on consumer sentiment, leaving many families feeling worse off than in the past. Last year, a surge in exports helped to make up for the persisting weakness in domestic demand, which is fueled by spending and investment. But U.S. President Donald Trump‘s orders to sharply raise tariffs on imports of Chinese goods may dent exports in coming months, raising risks for many types of businesses. Apart from expanding use of consumer credit, the government is spending tens of billions of dollars on car and appliance trade-in programs meant to encourage the use of more energy-efficient products, but also to soak up excess inventories due to weak demand. The level of consumer financing and other personal borrowing in China has tended to be much lower than in the U.S. and many other countries, although it has surged in recent years. Nearly nine in 10 Chinese families own their homes, while fewer than half of homeowners have mortgages. Use of cash and online apps and other forms of digital payments are more common than use of credit cards. Elaine Kurtenbach, AP business writer
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E-Commerce
As a crucial climate lawsuit heads to trial in Germany next week, experts say the case brought by Peruvian farmer Saul Luciano Lliuya against German energy giant RWE could set a significant precedent in the fight to hold major polluters accountable for climate change.“This is one of the first cases of its kinda case brought by someone directly affected by climate change against a major greenhouse gas emitterthat has made it all the way to trial,” said Noah Walker-Crawford, a research fellow at the London School of Economics and an adviser to the non-profit Germanwatch, which has been advising Lliuya.Lliuya’s lawsuit against RWE argues that the company’s historical greenhouse gas emissions have fueled global warming, accelerating glacial melt above his hometown of Huaraz, Peru. As a result, Lake Palcacocha has swelled to dangerous levels, threatening the community with the risk of catastrophic flooding.RWE, which has never operated in Peru, denies legal responsibility, arguing that climate change is a global issue caused by many contributors. Concern over melting glaciers “It’s very sad and painful to see the glaciers melting,” Lliuya, 45, told the Associated Press in a video call from Germany. “There is a lot of concern from people in my community about the future, about the issue of water, because all the rivers that come down from the mountains are used for farming.”Walker-Crawford said of all these cases around the world, this is the one that’s gone the furthest.“It has already set a partial precedent in that the courts found it admissible in 2017, which means that the judges said the case is solid in legal terms,” he said. “Now, the court is hearing evidence, and we’ll see whether the company’s responsibility can be proven in this specific case.”Sebastien Duyck, a senior attorney at the Center for International Environmental Law, says the reason why the case is so significant is not the decision itself or the amount of damages sought, but the precedent it would set.“If we could use tort law to say that any fossil fuel corporation that has contributed significantly to climate change can be held liable for climate-related costs in proportion to their emissions, it could open the door for many similar cases worldwide,” he said. Case could be a ‘game changer’ The case could be “a game changer,” according to Murray Worthy, from Zero Carbon Analytics, a research group on climate change.“This case is absolutely crucial,” Worthy said. “While this is just one case focused on this one place in Peru, the wider implications are huge. The costs and damages from climate change could run to tens of trillions of dollars a year, and if fossil fuel companies at large are found to be responsible for those and need to pay those costs, it would completely change the finances and outlook for the entire fossil fuel industry.”RWE is one of Germany’s largest energy companies, historically recognized as a major producer of electricity from fossil fuels.RWE says the lawsuit is legally inadmissible and that it sets a dangerous precedent by holding individual emitters accountable for global climate change.“In our view, there is no legal basis for holding individual issuers liable for global phenomena such as climate change. Due to the large number of global emissions of greenhouse gases from both natural and human sources, as well as the complexity of the climate, it is not possible, in our opinion, to legally attribute specific effects of climate change to a single issuer,” the company said in response to questions posed by the AP.The company insists climate solutions should be addressed through state and international policies, not the courts.Walker-Crawford said the court is entering the evidence-gathering phase, examining whether Lliuya’s home actually faces a significant risk of flooding.“If the court decides that the risk is high enough, it will then assess whether RWE’s emissions can be scientifically linked to that risk,” he said.Regardless of the case’s final outcome, Walker-Crawford said it’s likely to reinforce the legal foundation for future lawsuits.“Even if the specific risk in this case isn’t deemed high enough, the precedent that companies can be held liable for their climate impacts would still stand,” he said.The case’s outcome could also have financial repercussions. Climate litigation could impact financial markets “We’re already starting to see the impact of climate litigation on financial markets,” Walker-Crawford said. “Research has shown that when climate cases against corporations move past major hurdles, it negatively affects the stock market value of the companies being sued. Investors are starting to take note of the significant financial liability climate litigation can pose.”Lliuya, who also works as a mountain guide for tourists, said he started the lawsuit with little hope. Ten years on, that hope has grown.“When the German judges visited my home and the lake in 2022, it gave me hopehope that our voices were being heard and that justice might be possible,” he said. “Whatever the outcome, we have come a long way and I feel good about that,” he said.The hearing will begin Monday. Franklin Briceno in Lima, Peru, contributed to this report. The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org. Steven Grattan, Associated Press
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