Mexican producers anticipate that the tariff set on US apples this week will increase the price at which they sell the fruit in the local market by up to 15%, at least partially offsetting what they have considered an unfair competition from the United States for years.
The Mexican Government imposed tariffs of 15% to 25% on US steel products and some agricultural goods, including a 20% tariff on apples, in response to the tariffs set by the United States on steel and aluminum imports from Mexico, Canada, and the European Union.
"This will have an impact on that production. Prices will be more fair and domestic trade will be more protected," said Elier Garcia, the President of the Regional Agricultural Union of fruit growers in the State of Chihuahua (Unifrut).
Chihuahua is the largest producer of apples in Mexico, a country that, according to official data, produced 714,000 tons last year, covering about 78% of national consumption.
The United States is Mexico's main supplier of apples. Last year the US sent 277,000 tons of apples to Mexico, followed by Chile, with 3,264 tons.
Like other agricultural products, such as sugar and avocado, the Mexican apple has had a history of contrasts in the North American Free Trade Agreement (NAFTA), which includes Canada, Mexico and the United States.
Mexican producers have complained for years that the American fruit competes unfairly in the local market, affecting their profits and, in some cases, the government has set compensatory quotas.
The United States is Mexico's main supplier of apples. Last year the US sent 277,000 tons of apples to Mexico, followed by Chile, with 3,264 tons.
"A tariff quota like the one set now obviously benefit the apple sector and different sectors to which these tariffs were applied," said Garcia.
NAFTA member countries are currently negotiating a modernization of the agreement, but tariffs on steel and aluminum have muddied the talks.
Apple producers do not rule out that the United States is seeking to exert pressure on the talks through steel and aluminum tariffs, nor that the benefits they got from the tariffs Mexico imposed as a retaliation are temporary.
"We can't start banking on this to be a permanent tariff(...) We can't plan for the future," Garcia said.
Garcia ruled out a shortage as a result of the new tariffs for US apples, because the harvest in some producing states begins in July. In addition, if Mexico requires more fruit, Canada and Chile could benefit from this situation and supply part it.
Garcia also stated that he didn't believe the tariff would have a great impact on prices paid by consumers, as intermediaries would assume the additional costs to avoid the demand from falling. "These prices shouldn't affect consumers (...) We don't think they will have a strong impact," he added.
Source: americaeconomia.com