U.S. imposes 17 percent tariff on Mexico tomatoes
U.S. imposes 17 percent tariff on Mexico tomatoes
The U.S. government has imposed a 17 percent anti-dumping tariff on fresh tomato imports from Mexico, officially withdrawing from the multiple tomato trade agreement that have suspended the tariff since 1996.
Lance Jungmeyer, president of Nogales, AZ-based Fresh Produce Association of Americas, which largely represents U.S. companies that import fresh produce from south of the border, told The Produce News the initial result from the reimposition of the tariff will be volatility in the tomato market, including a potential drop in price. He added that it is not a reach to contemplate that the long-range impact, a year from now, will see U.S. consumers paying higher prices of $1 per pound or more at the grocery store.
The Mexico tomato tariff issue has been around since the mid-1990s when the Florida tomato industry brought a case against Mexico tomato producers arguing that they were dumping (selling below cost) fresh tomatoes into the U.S. market. A U.S. trade court agreed with them and ordered tariffs to be imposed. But on multiple occasions since that time beginning in 1996, the U.S. Department of Commerce has suspended the tariffs as long as the price of Mexican tomatoes were kept above a specific minimum level.
The July 14 announcement by the Department of Commerce essentially ends the latest suspension agreement, which has been in places since 2019. In making the announcement, Commerce Secretary Howard Lutnick said, “Mexico remains one of our greatest allies, but for far too long our farmers have been crushed by unfair trade practices that undercut pricing on produce like tomatoes. That ends today. This rule change is in line with President Trump’s trade policies and approach with Mexico.”
Florida Tomato Exchange Executive Vice President Robert Guenther did not immediately respond to inquiries from The Produce News, but he was quoted in an online story that appeared on the New York Times website on the evening of July 14: “This decision will protect hardworking American tomato growers from unfair Mexican trading practices and send a strong signal that the Trump administration is committed to ensuring fair markets for American agriculture,” he said, adding that the previous five agreements with Mexico had failed.
The Florida tomato industry has pointed toward statistics stating that Mexican tomato imports to the United States have risen from about 800 million pounds in 1994 to approximately 4 billion pounds today to argue its case.
Jungmeyer said his members are “extremely disappointed” in the decision and noted that they are “also hard-working Americans” who will be hurt by this decision. He noted that both the governor of Texas and its state legislature have spoke out against the anti-dumping tariff as they believe the tariff will hurt the Texas economy. He reported that more than 50 percent of tomatoes imported into the United States come in through the Texas border, where they are handled by Texas companies and their employees.
The FPAA and a long list of industry stakeholders and observers have argued that Mexico’s market share has grown because it produces vine ripe tomatoes vs. the mature green tomato varieties that have dominated Florida’s production. Jungmeyer said Florida relied on the fast-food industry, most notably burger chains, as a big customer of its product for decades, but over the years many of those foodservice chains have expressed a preference for vine-ripened tomatoes.
The tomato category has exploded in the past two decades with smaller tomatoes, such as grape tomatoes, Romas and flavor-packed cherry tomatoes garnering a lion’s share of the market. Jungmeyer said those are the varieties that consumers want. Instead of imposing tariffs on what he believes are market-driven varieties, he suggested that the U.S. Department of Agriculture should fund research helping Florida growers adapt to the changing desires of the American consumer.
“I would like to see the entire tomato industry work together to find a way to help grow the tomato category in much the same way that avocado producers from all over the world have grown the avocado category,” Jungmeyer said.
In explaining his comments about what the tomato market might do in both the short and long terms, the FPAA executive said the ending of the suspension agreement also eliminates the floor price for Mexican tomatoes. Many tomatoes are already in the ground and will be shipped to the U.S. market in the coming weeks. He believes the tariff will be a disruptive factor that may result in lower prices for all tomatoes. A lower market on any particular variety typically leaks to other products in the same category because of the supply-demand principle ever present in the perishable fresh produce industry.
But in the long run, Jungmeyer said nobody along the supply chain can absorb a 17 percent increase in costs. Eventually, the consumer will have to pay the added cost. Growers on both sides of the border may have to adjust supplies to account for decreasing demand, he believes. That in turn could produce supply shortages and higher prices, again that consumers will have to pay.
FPAA argued that “the Department of Commerce has consistently found Mexican tomatoes in compliance with the Tomato Suspension Agreement, contrary to false claims from the Florida Tomato Exchange.” It further states: “In a time of severe food inflation, the members of the FPAA urge the administration to negotiate a new tomato agreement that supports the innovations of U.S. importers, continues to fill the demands of U.S. consumers, and that helps domestic growers improve their ability to compete, via research, innovation and improved varieties rather than through duties on their U.S. competitors in Arizona, California, Texas and elsewhere.”
