If tomato prices surge due to new tariffs on Mexican-grown produce, businesses like Teresa Razo's might face challenges. "I give it three months, and then we go bankrupt," stated Teresa Razo, owner of two Argentine-Italian restaurants in Southern California.
The recent introduction of 17% tariffs on most Mexican tomato imports follows the expiration of a longstanding U.S.-Mexico trade agreement. This shift may result in increased prices for American consumers across various platforms, from grocery stores to pizza parlors, impacting smaller businesses to the point of closure.
The tariffs exemplify ongoing adjustments in trade policy, contributing to global trade uncertainties. Timothy Richards, a professor of agribusiness at Arizona State University, suggests that as a result of these tariffs, consumer tomato prices could rise by around 10%, with demand potentially decreasing by 5%.
The US Department of Agriculture highlights the United States as a primary market for Mexican tomato exports, noting that the tariffs might reduce imports and increase prices. Some American growers support these tariffs, arguing they counteract "dumping"—selling less expensive exports to undercut domestic products.
Withdrawn from the Tomato Suspension Agreement, effective since 1996, the Commerce Department cited this step as necessary to safeguard against unfairly priced imports. Consequently, duties could reach up to 20.9% on certain Mexican tomato imports.
Robert Guenther of the Florida Tomato Exchange remarks on the historic failure of past agreements to prevent illegal import practices from Mexican producers, claiming harm to American farmers. Conversely, Walberto Solorio, a Mexican grower, argues that minor infractions do not justify the entire agreement's collapse, viewing the issue as political rather than commercial.
Impacted businesses and consumers anticipate increased costs. Razo faces potential price hikes for dishes reliant on tomatoes unless she procures domestically grown produce. In contrast, some companies, such as Heinz and DiGiorno, utilize U.S.-grown tomatoes, sidestepping the tariffs. Apollonia's Pizza in Los Angeles might incur costs without transferring them to customers. "I just hope it comes to an end soon," said co-owner Justin De Leon.
Technological and geographic diversity within the U.S. purportedly allows for year-round tomato production, according to Guenther. Meanwhile, Solorio maintains that Mexican imports are subject to consistent audits, abiding by necessary regulations.
Source: CNN Business