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Tariff Carveout for Food; Tesla Changes Supply Chain; Consumerism in Question

By Liz Young | WSJ Logistics Report

 

Coffee at a grocery store in San Francisco. PHOTO: DAVID PAUL MORRIS/BLOOMBERG

President Trump rolled back tariffs on beef, coffee and dozens of other agricultural and food products as he seeks to address Americans’ concerns about the cost of living.

The WSJ’s Gavin Bade writes that Trump issued an executive order modifying the reciprocal tariffs he imposed on virtually every trading partner in August, exempting more than a hundred common food items including fruits, nuts and spices.

The newly exempted products on Friday, however, include many products commonly produced in the U.S.—such as beef, which has risen to record prices in recent months.

The move is part of a shift from the administration to water down some of its so-called reciprocal tariffs in the face of both price increases for consumers and legal uncertainty following a high-stakes Supreme Court hearing this month.

In their place, the administration has expanded other tariffs on individual industries like steel, aluminum and automobiles based on more established national security law.

 
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Supply Chain Strategies

Tesla vehicles line a parking area at the company's Fremont, Calif., factory. PHOTO: NOAH BERGER/ASSOCIATED PRESS

Tesla wants its American cars to be built without any Chinese parts.

The WSJ’s Raffaele Huang and Yoko Kubota report that the electric-vehicle maker decided earlier this year to stop using China-based suppliers for cars made in the U.S.

The strategy is the latest example of how trade and geopolitical tensions are driving a decoupling of the world’s two largest economies and redrawing global supply chains. The auto industry has been hit particularly hard because of the global nature of its supply chains and business.

Many American companies are seeking to exclude China-made components or manufacture outside of China. In turn, Chinese technology companies are erasing American components and technology from their supply chains.

Tesla and its suppliers have already replaced some China-made components with parts made elsewhere. The automaker is aiming to switch all other components to those made outside of China in the next year or two.

 
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Number of the Day

$2,328

Average price for shipping a 40-foot container from Shanghai to Los Angeles the week ending Nov. 13, down 12% from the week before and 50% from last year, according to Drewry’s World Container Index.

 

Economy & Trade

Barbie dolls imported from China line the shelves of the A to Z Toys store in Miami Beach, Fla. PHOTO: JOE RAEDLE/GETTY IMAGES

President Trump’s tariffs are challenging America’s addiction to cheap stuff.

Cheap goods from China and other countries have flooded the U.S. over the past several decades. Much of the clothing, homeware, tools and toys that Americans buy is now so inexpensive that it can be purchased almost without thinking.

The WSJ’s Rachel Wolfe reports that Trump has implied that Americans should just buy less in response to criticism that tariffs are making goods more expensive. That would be a major departure from the direction the country has gone. While corporations so far have not passed on the full impact of tariffs, few economists believe that will last as inflation ticks up.

Still, psychologists and analysts of consumer behavior say it will take a prolonged period of higher prices and lower availability, along with a broader shift in Americans’ collective mindset, for shopping habits to change for good.

 

Quotable

“The fact that it feels good to buy stuff isn’t going anywhere.”

— Stephanie Preston, a psychology professor at the University of Michigan
 
 

In Other News

The FAA will lift flight restrictions, ending the 6% traffic cut implemented last week, allowing normal operations to resume. (WSJ)

The U.S. reached a deal to reduce 39% import tariffs on Switzerland to 15%. (WSJ)

European Union goods exports to the U.S. rebounded in September. (WSJ)

Signs of weakness in China’s economy stretched into October, with one measure of investment notching the sharpest slowdown in years. (WSJ)

Several state attorneys general say the proposed railroad merger between Union Pacific and Norfolk Southern poses significant risk to American companies. (WSJ)

Walmart picked longtime executive John Furner as its next CEO as Doug McMillon plans to step down. (WSJ)

JBS, the largest beef processor in the U.S., is leaning into pricier Wagyu and expanding ground-beef production to help cope with rising cattle costs. (WSJ)

Jaguar Land Rover swung to a quarterly loss of almost $750 million after stopping its assembly lines in September to manage a debilitating hack. (WSJ)

Amazon and Microsoft are backing legislation that threatens to further limit Nvidia’s ability to export to China. (WSJ)

Air China's cargo arm signed a purchase agreement for six Airbus A350 freighters. (Air Cargo News)

The EU voted to end de minimis exemptions on imports in three years. (The Loadstar)

Germany’s Hapag-Lloyd plans to buy up to 22 new containerships. (Splash 247)

A New Jersey family arranged for a U.S. Postal Service truck after orders skyrocketed for the board game their teenage daughter invented. (WSJ)

 

About Us

Mark R. Long is editor of WSJ Logistics Report. Reach him at mark.long@wsj.com.

Follow the WSJ Logistics Report team on LinkedIn: Mark R. Long, Liz Young and Paul Berger.

 
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