The United States will impose a 17.5 percent tariff on Mexican tomato imports starting Tuesday — and economists say that could lead to shortages and price increases of up to 85 percent as soon as this winter.
The tariffs follow a breakdown of a 22-year-old agreement that had attempted to maintain the peace between American and Mexican tomato growers.
According to an analysis by economists at Arizona State University conducted in April, American consumers could soon be paying 40 percent to 85 percent more for vine-ripened fresh tomatoes.
Mexican imports account for approximately 54 percent of the U.S. tomato market.
The Arizona State study used statistical models that accounted for things like variation in demand and weather events, constructing scenarios that represent supply-shocks similar to removing Mexican imports from the U.S. market. The study found that American consumers will pay the lion’s share of the tariff impact because the demand for fresh tomatoes in relatively steady.
On Feb. 7, the U.S. Department of Commerce gave 90 days notice that it would withdraw from the 2013 Suspension Agreement on fresh tomatoes from Mexico unless a deal could be reached between Mexican and American growers.
Florida Tomato Exchange, a U.S. trade organization, argued that Mexican growers dumped artificially low-priced tomatoes on the U.S. market, undermining American farms.
The U.S. growers contended that as a result U.S. tomato production declined by 34 percent, from 4.4 billion pounds to 2.9 billion pounds between 2002 and 2017. Mexican tomato imports to the United States skyrocketed 125 percent, from 1.6 billion pounds to 3.6 billion pounds during the same period.
Mexican growers denied dumping and instead insisted that Florida hadn’t remained competitive in producing quality tomatoes at an affordable price.
For a bit, it looked as if talks would yield a compromise. But Michael Schadler, executive vice president of the Florida Tomato Exchange, said talks continue.
“There was a new proposal for a suspension agreement sent by the Commerce Department to the Mexican industry on Friday evening,” Schadler said in a phone interview. “Maybe the Mexican growers will like what they see in the proposal. We are in a waiting game again.”
