With President Trump threatening Mexico with additional tariffs on goods, the fresh produce industry is certainly keeping a close eye on proceedings. At this stage, a 5 percent tariff is due to come into force on June 10, increasing by 5 percent each month up to a maximum of 25 percent by October. The President said that he intends to use the tariffs to leverage Mexico into doing more about illegal immigration than what he perceives they are already doing.
The industry believes this will hurt everyone in the supply chain, from growers all the way through to the US consumer, which many say will end up paying more for their produce. "In regards to the President’s message about tariffs on all goods arriving from Mexico, the Texas International Produce Association is disappointed with this course of action," said Dante Galeazzi, President & CEO of the Texas International Produce Association.
"Tariffs are not absorbed solely by shipping entities," he continued. "These additions become increased costs in the supply chain which are ultimately passed on to American consumers in the form of higher priced products in the marketplace. We recognize the situation with migrant arrivals along our southern borders is a critical issue that requires a solution. However, the pressure should be on our U.S. elected officials to address Immigration and Asylum. The U.S. should not be creating additional costs for legitimate business entities, nor should we be increasing the costs of items like fresh produce for American consumers."
Already a tough market for some
The prospect of further pressure to the market is a blow to some businesses that are already experiencing a tough market, irrespective of the tariffs. Santis Produce supplies limes, avocados, mangos and other produce to the US and said the lime market in particular has been very competitive in recent weeks. Lime prices are decreasing and companies like Santis Produce say tariffs will only result in a rise in prices. According to the USDA, more than 90 percent of the limes in the US market are grown in Mexico.
"We are still waiting to see any movements with the tariffs coming into effect," noted Mario Cisneros of Santis Produce. "It's already a really tough market and to quote even 10 cents more than what we are offering will not be helpful as the market is that competitive right now. If the tariffs do hit, then we will be forced to raise our prices and in the end, consumers are going to pay more. This is also going to impact buyers of vehicles, many of which are now made in Mexico."
Other opportunities arise
All those in the industry FreshPlaza spoke with agree that the tariffs will only result in higher prices for everyone. US consumers can expect higher prices on goods should the tariffs be applied and expanded as promised. However, there are some growers and suppliers in Mexico who will be looking to other regions for additional business.
"We are really hoping the tariffs will not happen as it's likely we would lose quite a lot of money," said Estefania Anaya of Berry Lovers. "Like many businesses, we would have to raise our prices to cover the additional costs. However, we are anticipating an increase in the sales of berries to Canada and we are currently speaking to customs in order to truck berries into Canada, through the US, without having to pay the US tariff. We are also looking to increase our business to Asia and Europe."
For more information:
Dante Galeazzi
Texas International Produce Association
Ph: +1 (956) 581-8632
dante.galeazzi@texipa.org
www.texipa.org
Mario Cisneros
Santis Produce
Ph: +1 (956) 316-4457
mario.sales@santisproduce.com
www.santisproduce.com
Estefania Anaya
Berry Lovers
Ph: +1 (305) 407-3891
estefania.anay@producelovers.net
www.berrylovers.net