Nondairy milk drinkers rejoice!

Summary

Marketplace Morning Report: Episode Summary – "Nondairy Milk Drinkers Rejoice!"

Release Date: March 7, 2025

In this episode of the Marketplace Morning Report, host Sabri Beneshore delves into the complexities of recent U.S. trade policies, their ramifications on farmers, and the evolving landscape of non-dairy milk in the coffee industry. Through insightful discussions and expert interviews, the episode navigates the intricate interplay between government actions, agricultural practices, and consumer preferences.

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1. Tariff Turmoil and the USMCA Agreement

Timestamp: [00:01] – [02:09]

The episode opens with Sabri Beneshore addressing the sudden imposition and subsequent pause of a 25% import tax on goods from Canada and Mexico by President Trump. This move, which affects products under the USMCA (United States-Mexico-Canada Agreement), raises significant concerns about the stability and future of the trade pact that succeeded NAFTA.

Key Points:

• Tariff Implementation and Pause: President Trump's decision to implement a 25% tariff on imports from Canada and Mexico was abruptly paused after a month, but the suspension only applies to certain goods covered under the USMCA.

• Impact on Renegotiations: The tariffs have complicated the ongoing renegotiation efforts of the USMCA, which was slated for review by July 2026. Nova Sappho explains that while renegotiations can proceed ahead of schedule, the tariffs have strained relationships between the U.S. and its top trading partners.

Notable Quotes:

• Sabri Beneshore: “After throwing a 25% import tax on everything from Canada and Mexico on Tuesday, President Trump has now paused the tax, but just for a month...” [00:01]

• Nova Sappho: “Trump has antagonized our biggest trading partners. And after all, Canada right now is even talking about a prolonged trade war.” [01:47]

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2. The Ripple Effect on American Farmers

Timestamp: [02:09] – [07:06]

The discussion transitions to the agricultural sector, highlighting how tariffs are influencing farmers' planting decisions and export capabilities. With retaliatory tariffs from countries like China targeting major export crops such as soybeans, farmers are grappling with uncertainty regarding market demand.

Key Points:

• Retaliatory Tariffs: China's imposition of tariffs on U.S. exports like soybeans leads farmers to reconsider their crop choices, potentially shifting to domestically marketable crops like barley or oats.

• Geographical Constraints: Experts like Alex Schaefer from Oklahoma State University emphasize that not all farmers have the flexibility to diversify crops due to regional climate and soil suitability.

• Economic Uncertainty: Farmers face tough decisions without clear forecasts on how tariffs will evolve, impacting their livelihoods and the broader agricultural economy.

Notable Quotes:

• Naomi Blohm: “In some parts of the country, farmers might decide to diversify and grow crops that can be sold domestically.” [02:31]

• Alex Schaefer: “If I'm a farmer in Oklahoma, I don't have the choice really between wheat... versus apples...” [03:16]

• Justin Ho: “Farmers are going to have to make tough decisions on what to plant, not knowing how tariffs will play out.” [03:23]

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3. The Surge of Non-Dairy Milk in Coffee Shops

Timestamp: [04:54] – [07:06]

Shifting focus to the consumer side, the episode explores the rising popularity of non-dairy milk alternatives in coffee establishments. Daniel Ackerman's on-site investigation at a local Dunkin' Donuts drive-thru reveals significant policy changes impacting both businesses and customers.

Key Points:

• Policy Changes: Dunkin' has eliminated surcharges for drinks made with non-dairy milks, following Starbucks' lead from the previous year. This move aligns with consumer demand, particularly among Gen Z and millennial demographics.

• Cost Implications: While non-dairy milks like oat milk are pricier than traditional cow's milk, experts argue that the overall cost impact on coffee shops is minimal, allowing businesses to absorb these expenses without raising prices.

• Legal and Competitive Pressures: Legal challenges have accused surcharges as discriminatory, prompting major chains to remove additional fees. The competitive nature of the coffee industry likely encourages more chains to follow suit to retain customers.

Notable Quotes:

• Lizzie Fryer: “For Gen Z and millennial consumers, especially at coffee cafes, they're expected to have these types of non-dairy milks on offer.” [05:25]

• Steven Zagor: “Customers rebel when they look at a surcharge. It's like a company directly sticking their hand in their pocket.” [05:54]

• Miguel Gomez: “The cost of milk to make coffee is so small... companies will absorb this cost and they are not going to increase prices.” [06:26]

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Conclusion

The "Nondairy Milk Drinkers Rejoice!" episode of the Marketplace Morning Report effectively intertwines the broader economic implications of trade policies with the nuanced shifts in consumer behavior within the coffee industry. By dissecting the challenges faced by farmers due to fluctuating tariffs and spotlighting the strategic adjustments of major coffee chains in response to changing consumer preferences, the episode underscores the interconnectedness of policy decisions, economic sectors, and market trends.

Listeners gain a comprehensive understanding of how government actions ripple through various facets of the economy, influencing everything from international trade agreements to the daily choices of farmers and coffee enthusiasts alike.

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Transcript

[Sabri Beneshore]

Two words, tariff chaos from marketplace. I'm Sabri Ben ashore in for David Brancaccio. After throwing a 25% import tax on everything from Canada and Mexico on Tuesday, President Trump has now paused the tax, but just for a month, but also only just for some goods. Which ones? Hard to say because the pause applies only to goods covered under the USMCA free trade agreement between the U.S. canada and Mexico. This is the one that replaced NAFTA. And that raises an even more complicated question. What do these tariffs mean for this trade agreement at all marketplaces? Nova Sappho is here to try to answer that for us. Hi, Nova.

[Nova Sappho]

Oh, boy. Good morning, SABRI.

[Sabri Beneshore]

So the U.S. mexico, Canada agreement was already up for renegotiation soon. How did these tariffs affect that process?

[Nova Sappho]

You know, all three countries involved were gearing up to update the trade agreement. This was a deal that was struck in 2020 under Trump 1.0 and there was a renewal baked in. The US really wanted that. And the key date there, July 2026. We spoke with Jeffrey Schad about this timeline. He's a senior fellow at the Peterson Institute for International Economics. And he said it was even possible to move ahead those renegotiations. There's no reason why that review can't be jump started early. And negotiations between the United States, Mexico and Canada undertaken to fill in areas where new rules are needed and to update the rules in light of new developments in the marketplace. And there are items that needed updating. Sabri AI rules, for example. The problem now is that Trump has antagonized our biggest trading partners. And after all, Canada right now is even talking about a prolonged trade war.

[Sabri Beneshore]

Prolonged. So this pause is not enough to stop that war?

[Nova Sappho]

No, not yet, it appears, because it doesn't cover everything. As you mentioned, the assumption right now is that it's probably somewhere about half the trade cover under the USMCA that tariffs have been removed from. But there's still a lot that needs to be figured out. Sabri.

[Sabri Beneshore]

All right, Marketplace in Nova Safa, thank you so much.

[Nova Sappho]

You're welcome.

[Sabri Beneshore]

Among the items caught up in the ongoing trade wars is potash. It's used to make fertilizer. President Trump raised the tax on that to 25%, then reduced it to 10%. Still an added expense for farmers. But farmers aren't just being hit by import taxes. They're also facing revenge tariffs from other countries on what they try to export marketplaces. Justin Ho has more.

[Justin Ho]

Right now, farmers are starting to think about what they're going to plant. This coming spring. But now that China has slapped retaliatory tariffs on big export crops like soybeans, some of those producers are thinking, well, should I be planting as many soybeans as normal if we're potentially going to be losing some of that demand? That's Naomi Blohm with Total Farm Marketing. She says in some parts of the country, farmers might decide to diversify and grow crops that can be sold domestically. They might decide that they would plant barley instead of soybeans or they could plant oats. But farmers don't always have that option. Alex Schaefer at Oklahoma State University says the climate and soil in his state dictate what farmers can grow.

[Nova Sappho]

If I'm a farmer in Oklahoma, I.

[Sabri Beneshore]

Don'T have the choice really between wheat.

[Nova Sappho]

Which I might export, versus apples, which.

[Daniel Ackerman]

I would want to sell domestically.

[Justin Ho]

Either way, Schaefer says, farmers are going to have to make tough decisions on what to plant, not knowing how tariffs will play out. I'm Justin Ho from Marketplace.

[Sabri Beneshore]

New economic data in from China. China imported a lot less last month than usual. Imports fell almost 8.5% year to year in January and February. Domestic demand was fading. China's export growth also slowed down as US Tariffs came into effect. If you want to be savvy about the economy, the Marketplace newsletter is just what you need. Every Friday you'll get explainers and analysis that make sense of everything from the moving markets to grocery prices. No jargon, no hype, just smart takes delivered to your inbox. Sign up [e-mail] subscribe Non dairy milks have become particularly popular over the past few years. Oat milk, almond milk, soy milk, rice milk, coconut based milk, sorghum milk. And yes, the FDA said people can call it milk. They said that a couple of years ago. These can be found on menus nationwide. The ubiquity of these dairy substitutes is changing how restaurants are setting prices. Marketplace's Daniel Aerman went on an investigating investigative reporting trip to his local Dunkin Donuts Drive Thru.

[Daniel Ackerman]

I'm not usually a non dairy milk guy, but on my coffee run this morning I wanted to see something.

[Justin Ho]

Hi.

[Daniel Ackerman]

Looking good for you. Large iced coffee with almond milk, please.

[Justin Ho]

Do you have anything else?

[Daniel Ackerman]

No. But does that almond milk cost extra?

[Justin Ho]

No.

[Daniel Ackerman]

Okay, got it. Thank you.

[Justin Ho]

No problem.

[Daniel Ackerman]

This week Dunkin dropped its surcharges on drinks with non dairy milk. Starbucks did the same last year. So have lots of indie coffee shops. One person excited about these developments is Lizzie Fryer.

[Justin Ho]

I'm an oat milk fan.

[Daniel Ackerman]

Yes, oat milk fan and director of menu research at the consulting firm Tech Nomic and Fryer says. For Gen Z and millennial consumers, especially.

[Justin Ho]

At coffee cafes, they're expected to have these types of non dairy milks on offer.

[Daniel Ackerman]

But those alternatives aren't cheap. A gallon of oat milk can be twice the cost of a gallon of cow's milk, so coffee shops charging a little extra might make sense. But says Steven Zagor of Columbia Business.

[Nova Sappho]

School, customers rebel when they look at a surcharge. It's like a company directly sticking their hand in their pocket.

[Daniel Ackerman]

Zagor says. That's especially true for consumers with dairy allergies or who just prefer plant based milks for ethical or health reasons.

[Nova Sappho]

And then you go to a Starbucks or you go to a Dunkin and they're being penalized for trying to be healthy.

[Daniel Ackerman]

And it might not be a coincidence that the country's two biggest coffee chains are dropping the extra fees right now, says Miguel Gomez, a professor of food marketing at Cornell.

[Justin Ho]

Both companies have faced legal challenges that argue that the surcharges were discriminatory.

[Daniel Ackerman]

And in the grand scheme of running a coffee shop, Gomez says giving away a bit of non dairy milk isn't a huge deal.

[Justin Ho]

The cost of milk to make coffee is so small, it's single digits as a share of the total cost is so small that I think the companies will absorb this cost and they are not going to increase prices.

[Daniel Ackerman]

Gomez says the coffee shop landscape is so competitive, he expects more chains to follow suit. Otherwise they might lose their customers to the Dunkin down the street. I'm Daniel Ackerman for Marketplace, and in.

[Sabri Beneshore]

New York, I'm Sabri Benishore with the Marketplace morning Report from 8pM American Public Media.