The U.S. is introducing a 20% import tariff on all products from the European Union, as announced by President Trump in a speech in the White House garden. A minimum tariff of 10% will apply to all countries worldwide, with significantly higher rates for certain nations, up to 54% for Chinese products. The minimum tariff takes effect on Saturday, with the rest following next Wednesday. Reactions from the sector indicate that it's not so much the tariff itself, but the uncertainty it creates that is impacting the horticultural industry.
© Arlette Sijmonsma | HortiDaily.comUnder Trump's previous order, a 25% tariff was applied to all Mexican and Canadian goods that are not compliant with the United States-Mexico-Canada Agreement.
Higher tariffs
For some countries, the tariff is much higher than for the EU. Israel faces a 17% tariff on exports to the U.S., while India will see a 26% tariff, and Sri Lanka even a 44% tariff. China will be subject to a 34% tariff on top of the 20% Trump previously imposed.
Canada and Mexico, the U.S.'s neighboring countries, will not face new tariffs, although the previously announced 25% tariffs will take effect - but note these don't apply to Mexican or Canadian fresh produce, which are compliant with the USMCA agreement.
Import of supplies
U.S. greenhouse companies rely on imports from various countries to support their operations, sourcing materials, equipment, and biological products. Structural components such as glass and polycarbonate panels often come from Europe and China, while metal frames and greenhouse automation systems are frequently imported from the Netherlands, Germany, and Israel.Growing media like coconut coir is supplied by India and Sri Lanka, whereas peat moss comes from Canada and the Baltic States. Many greenhouse operations depend on seeds from the Netherlands, Israel, and France, along with ornamental plants from Costa Rica and Thailand. Fertilizers and biostimulants are imported from Spain, Norway, and Belgium, while biological pest control solutions, such as beneficial insects and biofungicides, often come from the Netherlands, Canada, and France. Hydroponic and aquaponic systems integrate components from China, Japan, and Germany, including sensors, nutrient film technique (NFT) channels, and specialized water treatment technologies. Then there are lights, automation, and cultivation utilities like hooks, and wires. The horticultural industry is a very international one.
Fresh produce and flowers from Canada and Mexico
As said, yesterday's announcements don't change anything for Mexico and Canada, two of America's closest trading partners. For Canada and Mexico, goods compliant under the U.S.-Mexico-Canada Agreement (USMCA), which includes specialty crops, are not subject to additional tariffs. "IFPA appreciates the administration's decision to allow continued trade of fresh produce and florals covered under the U.S.-Mexico-Canada Agreement (USMCA)," says Cathy Burns, IFPA CEO in a statement. "Fresh fruits, vegetables, and florals are among the most highly traded commodities across North America and beyond. Reducing trade barriers ensures that consumers continue to have access to fresh, affordable produce and floral products while supporting the growers and businesses that sustain the industry." However, IFPA remains concerned about the broader application of tariffs on global trading partners and the resulting disruptions to supply chains, market stability, and food prices worldwide. "The global trade of fresh produce is essential to the health and well-being of people in every nation. Targeted use of tariffs can be a tool for addressing inequities between trading partners, but the broad application of this blunt tool often disrupts markets, raises consumer costs, and places unnecessary strain on growers and producers across the supply chain."
Fresh produce imports
A recent analysis by Fruit & Vegetable Facts shows that the U.S. is heavily reliant on imports to meet domestic demand for fresh vegetables and fruit. Over a third of all fresh vegetable consumption in the U.S. comes from imported products. This share has remained stable in recent years despite continuous growth.
Fresh vegetable imports increased to 8.64 million tons last year, with tomatoes being by far the most important product. In 2024, U.S. tomato imports reached 2.13 million tons, up from 1.84 million tons in 2020. A staggering 90% of these tomatoes came from Mexico, with nearly 200,000 tons imported from Canada. Pepper imports grew to 1.27 million tons last year, primarily sourced from Mexico, along with 156,000 tons from Canada. Cucumbers ranked third, with imports reaching 1.18 million tons.
The U.S. is by far the world's largest importer of fresh vegetables and fruit. Last year, total imports increased slightly to 22.58 million tons, with the total value surging to over $33 billion. In value terms, the U.S. imports twice as much as Germany and China, the second and third largest importers. In terms of volume, the U.S. imports nearly three times as much as Germany. The Netherlands ranks just behind China.
Domestic vegetable production in the U.S. has remained stable for years, while fruit production continues to decline. Meanwhile, imports—both for fresh vegetables and fresh fruit—continue to grow.
Local prices
According to Pascal van Oers from VEK, an advisory firm specializing in large-scale horticultural projects, the import tariffs will lead to higher local prices for vegetables and fruit. "Higher prices can improve the business case for existing growers, but new growers will face higher startup costs, leading to a higher CAPEX. On the other hand, if your business case improves, you can afford a higher CAPEX. However, an investor must have the courage to invest because the situation could return to normal in six months, leaving them stuck with excessively high investment costs."
Currency fluctuations, driven by market uncertainty, are also contributing to rising costs—another unstable factor in the current market.
Existing growers will face higher production costs due to import tariffs on various cultivation supplies. However, Pascal notes that this impact is relatively minor in the overall financial balance of a greenhouse operation. The largest expenses for high-tech greenhouse farms are energy and labor, followed by capital. "Roughly speaking, the remaining quarter consists of raw materials, which will largely become more expensive." A key question is how U.S. energy prices will be affected. "The expectation is that they will rise further. However, energy-importing countries (such as LNG importers) may introduce countermeasures, potentially increasing energy availability in the U.S. and mitigating price hikes."
"Greater impact on suppliers than exporters"
Cindy van Rijswick of Rabobank Netherlands points out that the U.S. is not a major market for Dutch fruit and vegetable exports. "For suppliers, the consequences will be greater than for the fruit and vegetable sector. Some greenhouse builders, for example, already operate in the U.S. and source materials locally, but they will now face higher costs for imported steel and other raw materials. Not everything can be sourced domestically. Other agricultural inputs, such as vegetable seeds and flower bulbs from the Netherlands, are also exported to the U.S. However, I don't expect a major price sensitivity for these products, so the impact should be manageable."
Cindy does not believe these import tariffs will strengthen the U.S. horticultural sector. "This doesn't help U.S. horticultural companies at all. They were just starting to recover from a downturn, thanks to stabilized costs and stronger domestic sales. Now, all of that is at risk."
Uncertain future for horticultural suppliers
Horticultural suppliers expected to be affected by these tariffs are hesitant to respond, as the issue is politically sensitive and still unclear. Questions remain about shipments already en route to the U.S., the price of horticultural glass, which is mainly imported from China, and whether exemptions will be granted for agricultural technologies—similar to past exemptions for specific steel and aluminum products.
"It is claimed that growers will source their products locally, but many Dutch technologies are imported precisely because they aren't available in the U.S.," a Dutch supplier said. "The Netherlands is a major supplier because of its high level of expertise."
One thing is certain: growers and suppliers have faced numerous challenges in recent years, from the pandemic and soaring raw material costs to the energy crisis and declining investor interest. Now, uncertainty over import tariffs adds yet another layer of difficulty. New construction has significantly declined, and the full potential of the market has not been realized in recent years. This new uncertainty only makes things more challenging.