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.
According to an analysis by economists at Arizona State University conducted in April, American consumers could soon be paying 40 to 85 percent more for vine-ripened fresh tomatoes.
Mexican imports account for about 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 is relatively steady.
On Feb. 7, the Commerce Department gave 90 days’ notice that it would withdraw from the 2013 version of the 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 negotiations would yield a compromise.
On April 8, Mexican growers offered concessions such as increasing some prices on tomatoes and compelling growers to take back shipments with high rates of defective tomatoes at their own expense.
In response, the U.S. tomato growers released a statement saying, “We welcome the Mexican proposal because, for the first time, it contains some useful suggestions on how to prevent circumvention of the suspension agreement by Mexican producers.”
But Michael Schadler, executive vice president of the Florida Tomato Exchange, said negotiations would 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. It behooves them to move fast because the clock is ticking, and the duty starts today.”
Lance Jungmeyer, president of the Fresh Produce Association of the Americas in Nogales, Ariz., said we may not see shortages or higher prices immediately because in the summer months, fresh tomatoes are grown many places in the United States.
But if domestic tomato growers experience hurricanes or frost this fall and winter, the lack of Mexican tomatoes will be noticeable. Jungmeyer thinks consumers have turned away from Florida’s field-grown, harvested-green-and-gassed tomatoes.
“The trend is clear that people want tomatoes grown in a protected greenhouse environment — tomatoes on the vine and specialty tomatoes,” he said. “Tomatoes are the No. 1 Mexican agricultural export to the U.S.”