U.S. Government Imposes 17% Duty on Mexican Tomatoes

In a significant move announced on Monday, the U.S. government is imposing a 17% duty on most fresh tomatoes imported from Mexico. This decision comes after negotiations failed to produce an agreement to avoid the tariff, a sequel to ongoing trade discussions between the two countries.

Impact on the U.S. Tomato Industry

Proponents of the import tax believe it will aid in revitalizing the declining U.S. tomato industry, which has seen a substantial shift in market supply dynamics. Currently, Mexico accounts for approximately 70% of the U.S. tomato market, a notable rise from just 30% two decades ago, according to data from the Florida Tomato Exchange.

Robert Guenther, executive vice president of the Florida Tomato Exchange, heralded the duty as “an enormous victory for American tomato farmers and American agriculture.”

Concerns for Consumers

However, critics warn that this new import tax could lead to higher prices for consumers in the U.S. Mexico’s Economic Secretary, Marcelo Ebrard, expressed concerns in a statement regarding the tariff’s potential impact, stating it would “only affect the pockets of American consumers.” He further claimed the move is unfair to both Mexican producers and the American industry, attributing Mexican tomatoes’ market success to product quality rather than unfair competition.

Price Predictions and Economic Implications

Experts anticipate that U.S. retail prices for tomatoes might rise by approximately 8.5% due to the new duty. Tim Richards, a professor at the Morrison School of Agribusiness at Arizona State University, highlights this potential increase, while Jacob Jensen, a trade policy analyst at the American Action Forum, suggests areas that rely heavily on Mexican tomatoes could see price hikes nearing 10%. On the other hand, regions less dependent on Mexican imports might experience smaller increases around 6%.

Lance Jungmeyer, president of the Fresh Produce Association of the Americas, voiced his concern about the “tomato tax,” indicating that American consumers may face a reduced selection of preferred tomato varieties as a result of the duty.

Background and Context

The imposition of this duty stems from longstanding grievances regarding Mexico’s tomato exports. The U.S. Department of Commerce withdrew from a previously established Tomato Suspension Agreement, which had sought to prevent dumping—where products are sold at artificially low prices. Since the inception of this deal in 2019, both countries have managed to avoid tariffs through periodic agreement renewals until now.

Commerce Secretary Howard Lutnick stated, “This rule change is in line with President Trump’s trade policies and approach with Mexico,” emphasizing that the move aims to protect U.S. farmers from unfair trade practices.

Calls for a Different Approach

Despite support for the tariff from some sectors, significant apprehensions have arisen from the U.S. Chamber of Commerce and the National Restaurant Association, which urged for ongoing negotiations with Mexico. Bipartisan support was also evident as Texas Governor Greg Abbott and Arizona Governor Katie Hobbs called for the existing tomato agreement to remain intact.

A letter signed by the U.S. Chamber of Commerce and over 30 business groups warned that withdrawing from the agreement could provoke retaliatory measures from trading partners, potentially disrupting other U.S. agricultural imports and affecting businesses nationwide.