Study: Tomato tariffs likely to cost consumers

Jaime C. Guzman, produce manager, stocks tomatoes Wednesday in the produce section of A&V Lopez Supermarket on International Boulevard in Brownsville. Tomato prices could soon be increasing across the United States because of a new tariff on Mexican tomatoes, experts caution. (Ryan Henry | The Brownsville Herald)

Fresh tomatoes imported from Mexico are about to become scarcer and pricier thanks to the Trump administration’s withdrawal from the Tomato Suspension Agreement with Mexico, and its imposition of a 17.5 percent tariff on fresh Mexican tomatoes, according to researchers at Arizona State University.

The Border Trade Alliance, a cross-border trade advocacy group, cites the ASU study in decrying the U.S. Commerce Department’s formal withdrawal from the pact and imposition of tariffs. BTA President Britton Clarke said in a statement that the organization regrets the Commerce Department’s withdrawal from the agreement, created in 1996 and last updated in 2013, that has regulated the U.S.-Mexico tomato trade for decades.

“It’s a move that hits shoppers in the wallet,” she said. “As a result of this decision and the establishment of tariffs on fresh tomato imports from Mexico, U.S. consumers will face higher prices on popular tomato varieties.”

BTA is made up of public- and private-sector representatives from the United States, Mexico and Canada.

The ASU study predicts that, depending on tomato variety and time of year, consumers could end up paying between 40 percent to 85 percent more for Mexican tomatoes as a result of the administration’s action.

The Commerce Department said negotiations with Mexico’s tomato growers would continue in hopes of forging a revised agreement, though Clarke contends that the government could have remained in talks with Mexico’s tomato producers rather than pulling out of the pact altogether.

“We take the department at its word that negotiations over a possible revised agreement will continue,” she said. “They must continue with urgency, or we risk inflicting lasting damage on the U.S. economy.”

Clark said the withdrawal reopens an anti-dumping case against Mexico that a “small but vocal band of agricultural interests” in Georgia and Florida have been lobbying for.

“We hope that agricultural trade between the U.S. and Mexico will soon be conducted tariff free,” she said. “Good trade policy should reflect the needs of consumers and the U.S. economy broadly, not the concerns of a small but vocal band of regional interests.”

U.S. Rep. Filemon Vela, D-Brownsville, at the request of some Rio Grande Valley produce importers, the Texas International Produce Association and BTA, signed onto an April 5 letter from U.S. Rep. Vicente Gonzalez, D-McAllen, to Commerce Secretary Wilbur Ross asking that the Tomato Suspension Agreement be maintained.

The letter, also signed by U.S. Rep. Sheila Jackson Lee, D-Houston, argues that “erecting new barriers to trade in fruits and vegetables risks negatively affecting American consumers” and the U.S. agriculture industry, and may impact ratification of the new U.S.-Mexico-Canada Agreement, meant to replace NAFTA.

It could also jeopardize the United States’ relationship with a main importer of U.S. goods, according to the letter, which notes that the United States is Mexico’s top agricultural trading partner, exporting $18 billion worth of products a year, which represents about 70 percent of Mexico’s agri-food imports.

Tomato imports alone account for more than 30,000 U.S. jobs and support a supply chain that generates almost $3 billion in U.S. Gross Domestic Product, according to the ASU study.

The letter to Commerce Secretary Ross argues that “maintaining a healthy bilateral trade relationship with Mexico is essential to the continued growth of the American economy, while ensuring consumer access to affordable fresh produce, especially in cold-weather months.”

Luke Theriot, a senior policy adviser with Vela’s congressional office, said the administration’s decision will impact Valley produce importers.

“As much produce as comes through the border in our district and the Texas border, it would severely damage the business of a lot of those produce importers along the border,” he said.

In a statement, U.S. Rep. Vicente Gonzalez said he has long urged Ross not to exit the pact, “with the hope that cooler heads would prevail.”

“It’s unfortunate that the Trump administration could not come to an agreement on a deal with Mexico that provides businesses and consumers on both sides of the border access to affordable fresh tomatoes, pizza sauce, salsa, ketchup and everything in between,” he said.

Gonzalez said the new tariffs will “hit Americans’ pocketbooks and interrupt supply chains,” and implored Ross and the administration to continue negotiating in good faith with Mexico toward a “sustainable and mutually beneficial agreement.”

The administration’s move on tomatoes comes amid Trump’s threats to escalate the trade war with China by imposing more tariffs on that country’s exports. Antonio Garza, former U.S. ambassador to Mexico and now counsel to White & Case in Mexico City, observed in an email that U.S. tariff policies are “getting kind of crazy.”

“First, steel and aluminum on Canada and Mexico, now tomatoes, and soon ($200 billion in tariffs) on China, and a president trying to have us believe that all will be paid by Mexico and China,” he said. “Anyone who’s old enough to have paid the tobacco or liquor taxes when returning from Matamoros to Brownsville knows exactly who pays those taxes, and it’s not Mexico.”

Garza, a Brownsville native who has also served as Texas Railroad Commission, Texas secretary of state and Cameron County judge, thinks the administration’s stance on tomatoes is “mostly bluster.”

“Steel and aluminum (tariffs) should come off by late summer, and when the president sees what no deal with China might mean to the U.S. economy, he’ll get serious,” he said. “It’s time to quit playing games and get the USMCA to Congress and ratified, and follow on by getting a deal with China done.”

It Trump persists, U.S. consumers will see shortages and higher prices on the shelf by fall, Garza said.

“Those steel tariffs are already costing the American taxpayer about $900,000 per job ‘saved,’” he said. “Quite the deal maker, that Trump fellow.”

Editor’s Note: This story was updated with additional remarks from U.S. Rep. Vicente Gonzalez, D-McAllen.