On Monday, the U.S. government announced a 17% duty on most fresh Mexican tomatoes following unsuccessful negotiations to avoid the tariff. Supporters argue that the import tax will help revitalize the declining U.S. tomato industry and ensure that domestically grown produce is consumed in the U.S. Currently, Mexico supplies approximately 70% of the U.S. tomato market, a significant increase from 30% two decades ago as reported by the Florida Tomato Exchange. Conversely, opponents, including U.S. companies with tomato operations in Mexico, warn that the tariff will raise prices for fresh tomatoes for American consumers.
Tim Richards, a professor at Arizona State University’s Morrison School of Agribusiness, predicts that retail prices for tomatoes in the U.S. could rise by around 8.5% due to the 17% duty. This duty is a result of a longstanding U.S. complaint regarding Mexico’s tomato exports and is distinct from the 30% base tariff on Mexican and European Union products announced by President Donald Trump over the weekend.
The Commerce Department recently withdrew from a 2019 agreement with Mexico that aimed to address allegations of the country exporting tomatoes to the U.S. at artificially low prices, a practice known as dumping. Under the agreement, Mexico was required to adhere to minimum pricing rules and other regulations. Although the deal underwent periodic reviews, this is the first time the two parties failed to reach an agreement, leading to the imposition of duties.
The decision to exit the Tomato Suspension Agreement was influenced by feedback from U.S. tomato growers seeking increased protection from Mexican imports. However, organizations like the U.S. Chamber of Commerce and the National Restaurant Association urged the Commerce Department to negotiate a resolution with Mexico. In a joint letter to Commerce Secretary Howard Lutnick, these groups emphasized the significant economic benefits generated by U.S. companies involved in importing tomatoes from Mexico and expressed concerns about potential retaliatory actions from trading partners that could negatively impact American businesses and consumers.
