STiR coffee and tea magazine

46 STiR coffee and tea | 2025 Quarter 2 Summer (Jun/jul/Aug) Perspective by Dan Bolton T US Tariffs Desecrate Rules-Based Trade he United States is dismantling the trade system it helped build one punitive tariff at a time. These tariffs aren't reciprocal or fair. They are being meted out as unilateral punishments—simplistic calculations based on bilateral trade deficits. The US has turned global trade into a zero-sum game, and tea businesses are paying the price. Sourcing decisions once based on quality, price, and reliability are now clouded by geopolitics. Retaliatory tariffs exceeding 100% force importers to weigh political alignment alongside flavor and freshness. This isn't global trade; it's economic hostage-taking. Japan will bow, Vietnam will grovel, and Cambodia will cringe. Europe will retali- ate, and China will declare economic war. The US is not interested in dialogue. America has abandoned its role as a global economic steward. Even worse, the US sidestepped Congress and shredded multilateral norms, in- cluding World Trade Organization processes. This isn't leadership. Its isolationism disguised as a strategy enforced by transient executive orders, not thoughtfully negoti- ated treaties. Tariffs were a known risk. But now, business costs swing wildly without warning. Overnight rate hikes and arbitrary exclusions have made planning impossible. Uncer- tainty is no longer a risk—it's the system. No entrepreneur, importer, or consumer can plan confidently when the rules are arbitrarily rewritten. The unintended consequences are piling up: rising consumer prices, disrupted sup- ply chains, shrinking margins, and layoffs. The reputational harm globally has shattered trust in America as a trade partner. Tariffs may be pitched as strategic leverage, but setting ridiculously high rates and haphazard execution is reckless. They desecrate the foundational idea that trade should foster peace, prosperity, and mutual benefit. What remains is a splintered, diminished world economy where fear and uncertainty reign—hardly the outcome of a successful trade policy. Sourcing decisions once based on quality, price, and reliability are now clouded by geopolitics. Photo courtesy Diana Jendoubi Tariffs Upend a Harmonious Tea Trading Century Tariffs on tea have been out of favor for the past century. Even the infamous Smoot- Hawley Tariff Act of 1930 exempted tea. In fact, with the US signature on the 1947 General Agreement on Tariffs and Trade Act (GATT), the post-World War II era saw minimal trade friction as tea ar- rived duty-free, except for low tariffs on processed and flavored tea. Bulk tea was classified as a "non-competitive product." Importers from vast swaths of the globe, Africa, Europe, and South Asia enjoyed free access. The US waived 10% tariffs on flavored tea imported from Australia and Canada when GATT was replaced by the Harmonized Tariff Schedule of the US (HTSUS). In contrast, taxes and duties remain high in the tea lands, primarily to protect domestic markets. The tea industry in India, for example, employs millions of workers. Allowing retailers to sell low-cost imports from Asia and East Africa would result in job losses. The only exception is tea for re-export, and the Indian Tea Association advocates ending that exemption. ITA wants the government to impose a 100% duty on bulk imports to prevent blending and re-exporting African and Asian tea. The volume of tea imported from Kenya, China, Bangladesh, Malawi, Tanzania, Nepal, and Iran increased by 288% from January to November 2024 compared to the same period in the previous year. In- dian importers paid as little as $1.50 per kilo, well below the cost of producing the same tea in Assam. High Trade Barriers Discourage Global Trade Five challenges that arise from erecting high trade barriers. ● Market Access and Trade Flow Tariffs create artificial price barriers that can alter trade routes. Favorable tariffs offer rival producers a com- petitive edge. Free trade agreements also shift demand. High tariffs deter tea imports, shielding local sellers, they also reduce competition, result- ing in higher retail prices, as domestic suppliers match the price of imports without paying duties. By Dan Bolton

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